BANCA GENERALI - SOCIETA' PER AZIONI O IN FORMA ABBREVIATA: GENERBANCA (2BGN) Q2 2026 Earnings Call Transcript

Good afternoon, this is the Corosco Conference Operator. Welcome and thank you for joining the Banca Generale First Half 2026 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. Gianmaria Mossa, CEO and General Manager of Banca Generali. Please, go ahead, sir.

Good afternoon, and welcome to our first half results conference call. First half results are the best ever, with net profit at the highest level, 279 million euros, total assets at the highest level, €121 billion, and the net influx for the first half at the highest level ever, €4.4 billion. Focusing on the net influx, the quality has been improving over the time, and we are very confident to keep going with this quality thanks to the strengthening of our asset management hub and the new release of products. But let's start, as usual, from numbers, so page four, net profit accelerated in Q2, as I said. In the first half, the overall result is 279 million euro. In the first half, 152. This number comes from an acceleration of both the components, recurring net profit at at €180 million and the variable net profit at 43.6. If you see the variable net profit, you can see that there is a one-off of €20 million tax charge. This is due to the application of the standard corporate taxation in Luxembourg for our asset management company following the current unavailability of a tax benefit for the asset management company we will see it later page five now we'll go through the reunions components starting from net financial income overall net financial income closed at 97 million euro or 189 in the first half. Again, also in this case, the good results come from positive contribution by both components, net interest income, slightly higher, 84.8, and a higher contribution of trading gains and others thanks to the significant contribution from InterMont. Overall, the total net interest margin closed at 1.96, that is in line with our guidance. Page 6, the other component of revenues, so total gross fees. Second quarter, 393 million euros. Overall, first half, 741. And while the variable fees, you see the acceleration in the second quarter, thanks to the positive market trends and the great quality of the investment strategies. Overall, margins for growth recurring fees is in line with the previous quarter at 1.07. So focusing on the recurring components, you know you have two different parts. The first one is about investment fees. Here you see a double-digit growth. In particular, the second quarter was very strong at 258. And here, the result is the sum of an acceleration in advisory fees and an acceleration of management fees, both at double-digit growth. In terms of margins, here you see a pickup of the margins at 1.44. This is basically driven by the positive trend of the market. but we stick to our guidance of margins at 1.4 and 1.42 for the mid-year. Page 8, the second component of the recurring fees, that is about other fees. Other fees were very strong in the second quarter, 46 million euros, and as an overall result for the first half, above 90 million euros. And again, here we had very strong entry fees, thanks to the excellent work in the product placement structure products. Strong results also in the brokerage commission, thanks to solid activity of both retail and corporate clients. And last but not least, you can start seeing a pick-up on the banking fees. overall margins on other fees pretty stable over time at 0.16 so all the revenues components grew at double-digit growth while the cost is in line with our guidance let's start at page 9 with the payout ratio overall payout ratio slightly lower than the targets announced. Payout to the FAA's ordinary payout at 35.5. I remember that the guidance here is 36%. Cost of growth below 12% at 10.5, excluding a positive one-off, and the overall payout to third parties goes to 6.2. In this case, excluding a negative one-off, and the 6.2 is broadly stable in line with the second quarter of the previous year for some seasonality. So, again, very solid steering of the cost of the network, and we continue to share the revenues with the target to be announced. Page 10, you see the operating cost here. We are slightly higher compared to the guidance of 6-8%, and this is basically driven by the acceleration of all major projects. So we have, as you know, the Infobanking, and I will give some numbers on Infobanking later. Intermonte is going very well, as well as all the projects linked to artificial intelligence. In the non-recurring components, you see a spike at 5 million euros, and this is basically all investments for future growth are about advisory to scout the markets, to think of the strategy for the next year, so it's a typical one-off when you are close to the launch of a strategic plan. Page 11, operating leverage. in terms of operating costs on total assets, we achieve the best result at 0.27, and also all cost-income ratio measures are in line for better than expected. So, closing this first part of the presentation, 3H12, very solid results in the core components, very solid operating lines and results. Below operating lines, you see an improvement for the normalization of some one-off. And about the tax charges, the 20 million euro, thanks to the positive discussion with the relaxing of authorities and the initiatives in our asset management hub that we will explain in the business update part. We are confident to reabsorb this spike, and we have a guidance, medium-term guidance, by the end of 2028, around 27%, 28%. Last bullet, you see the contribution of Intermonte, strong acceleration of the overall results, 6.2 million of net profit. impressive, the synergies, the revenue synergies, already close to 8 million Euro on a target for the first half in the range 10-15 million, and this is a great part thanks to the structured product, some advisor mandates and asset management, and we will see further improvement both in this part of the business as well as in the M&A activities. So now, moving on to the next section, so Bowship, page 14, starting from the total liabilities, everything is pretty stable due to the strong activity in asset management in the second quarter. You see the fund deposits slightly higher, from 13.9 to 14 billion euros in the second Cost of funding slightly higher, 0.77, in line with the trend of the interest rates. Page 15, on the total asset side, also here are pretty stable numbers. Overall interest-bearing assets at $17.1 billion, with the yield on these assets slightly higher at $2.73. Last page of this chapter, page 16, we have capital liquidity ratios, also we have very stable numbers, total capital ratio at 19%, leverage ratio at 5.7, and all the end liquidity coverage ratio net stable funding ratio well above the FREP required. So, now let's move on on the assets recruiting and making flows part, page 18, the usual presentation we introduced in the first conference call of this year about total assets in which we give also the trend of the infobanking business. You see the Instagram, first of all, the 121 billion euro, as I mentioned, the highest level ever of total assets, BG total assets, while the 7.9 billion is about insured banking, so the assets that we advise or manage directly in the insurance products for general clients. Referring to Alianza, I mentioned before, we are very confident with numbers and with this project. We have just completed the rollout of the banking offer to the private advisory network and we completed it in June of this year. If you look at the numbers of current accounts, we exceeded 5,000 current accounts in the first half, and we confirmed the target of at least 15,000 Kana-Kan, and for the insured banking business, we closed the first half with more or less 200 million euros of net influx on the insurance wrapper for a total 260 since the beginning of the partnership. And also in this case, we confirmed to exceed half billion euros for the end of this year. The feeling, our feeling for this project is very positive also as on the territory, we see great collaboration between the Allianza network and the managerial structure of Banca Generali Network, and we're just at the beginning of the journey with exciting feedback from Allianza Network. Page 19, we focus on the total assets of DigiCline. First time, as I mentioned, we exceeded 120 billion euro. If we focus on the left, you see that the overall advanced advisory fees business exceeded 13 billion euros, and you see a constant increase of the weight of advanced advisory fees and total assets. Now they account for 11%. At the right of the page, you see the presentation of total assets by C categories. More than 80 billion euros generate recurring fees, and the major increase is about the managed solutions so 56.9 billion euro let's focus on these 56.9 billion euro page 20. here you see the impressive acceleration of in-house products now in-house products accounts for more than 30 billion euro or 53.2 percent of the total managed solution and you see an increase of 2.5 percentage in only one year and this is thanks to the excellent work of the of the portfolio managers for the financial rappers and the introduction of protection in the Now, moving on from total assets to total net inflows, as I mentioned at the beginning, record level of net inflows, 4.4 billion and at page 21, and you can see that assets under investment account for 2.1 billion and the greatest part comes from the managed solution 1.9 and again the major contributor of this 1.9 is about in-house product with more than 1 million in in-house fund and 400 million in financial profits. It's not just about the quality of the inflows, but also the contribution of the different distribution channels, in particular page 2, the existing one, so our existing colleagues exceeded the result of last year by almost 50% or 1 billion, moving from 2.2 billion to 3.2 billion and you see also the recovery of recruitment with a total contribution of 1.2 billion or 50% higher compared to the last year and also higher compared to two years ago. And I'm sure that more will come in the second half. Why? As we are accelerating the recruitment activity we are already on board of 106 new colleagues what impressed me more is the part coming from private banks you see the number 33 that is the highest one and this is also thanks to the proposition with intermonter so now we are able to attract also private bankers with the specific competencies in the corporate advisory business. Now, so the business activity is very sound, well distributed on the field, and as I mentioned, the quality is pretty impressive, and I'm pretty confident to see this quality also for the second half of the year, as we are investing a lot on our asset management hub and on product innovation. So moving on to page 24, you see the structure of our Banca Generale Asset Management Hub. We have three major components. Luxembourg platform. In the Luxembourg platform, you know, basically we provide funds, product markets, and multi-asset solutions. But it's all about Seeker and funds. In the middle of the page and of the representation, you see our Italian capabilities or our investment hub. Here, we are probably at the best player or among the best players in managing personalized financial wrappers. And now we can leverage also the Intermonte capabilities. And then InvestLinks. InvestLinks is a Nourish platform, you know, we closed this deal to enter the active ETF industry, but InvestLinks has also a license for fund business. So we have greater flexibility in deciding where launching new initiatives, also for the single fund and single fund business. Page 25, you see the major achievements for these three blocks of the first half of this year. Starting from the left, so our Luxembourg platform, these numbers are as of the 25th of July. So there is some numbers also realized of July. You see that the overall net inflows for funds in the industry in Luxembourg retail business is around $1.4 billion, of which $1 billion in the new family of protected funds. And these initiatives were launched with top investment banker players, U.S. investment players as J.P. Morgan, Morgan Stanley, or Bank of America. So the proposition invest in equity or protecting the downside is working very well as offering a predefined coupon. Regarding the Italian offer, the financial wrappers, here you have two different businesses, the personalized financial wrappers, so for top clients where we are performing very well. And then also in this space, we launched protected solutions in partnership with Intermonte for the aging strategy. And here we exceeded 200 million euros. So part of the synergies with Intermonte comes from this business. Last but not least, we have just signed a contract with InvestLins, and we already launched the first active ETF. It's an ETF focused on a small-medium enterprise in Italy. So we are very quick and flexible in launching niche initiatives, niche ETFs, as we show how flexible, dynamic, and fast is this kind of platform to be in the market with new initiatives. So thanks to these three different blocks, we are confident to maintain great flexibility for the second half. We are a pipeline of very strong product offering, and you will see during our strategic plan how we are sure to leverage all the free platforms to excel in the asset management industry. Last but not least, page 25, some guidance for this year. You see on the net inflows in particular, we increased the target of total net inflows from a target of higher than 6.5 billion to an average of 7.5 billion euro. So we confirmed positive trend also for July, where we are confident to exceed half billion. And in terms of target of product mix, we confirm to exceed $4.0 billion of asset under investment. Second block, you see targets in terms of margins, cost, and tax rate. In the first column, you see how we close the first half. And then you see the guidance for the medium long-term. We are confident to stay in the range 1.4, 1.42 for the measurement fee margin. As I explained, now we have some positive effects from the positive markets. Core operating costs. We confirmed long-term guidance to stay in the range 6% to 8% with the spike in the first half of this year and probably also the second one as we want to accelerate all the projects for future growth. And then the tax rate, as I mentioned, you see the spike at 30.5% for this first half, but we are confident to absorb a great part of this spike and we give a new guidance in the range of 27-28% for the mid-term. So now the presentation is concluded and I will hand over for the Q&A session.

Toros Co-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 touchstone 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. The first question comes from Marco Nicolai with Jefferies. Please go ahead.

Hello, I've got a few questions on my end. So you got for margins at 1.4, 1.42 over the medium term. So can you just remember us what gives you confidence that this will remain solid in the future and that you won't face further pressure on these margins, perhaps driven by competition or so on and so forth um on the nii first question can you remember us the average balance in the current accounts open under the allianza partnership another question on nii is around the deposit um costs that so i pick up in the second quarter is the repricing now done and what do you expect from here on this front and the last question on the guidance you didn't upgrade asset under aui inflows and so obviously you have an open-ended type of guidance here but it seems that even analyzing the first half which is anyway weaker seasonally you're already at 4.2 so do you think a 4.5 billion is too far as a as a target thank you thank you marco so let's say that if you think of margins in asset management we have different

levers to compensate any downward pressure. For example, we have the highest exposure in traditional life insurance products where margins are definitely lower. We are among the most exposed to third-party funds, and also in this case there is room to internalize patterns of margins. And then there is the partnership with investment banking and Intermonte, where we can increase margins of the underlying. So for all these reasons, we are confident to confirm the target 1.4, 1.42, considering also that now the level is a little bit higher. and consider that in these 1.4, 1.42, there is also the insured banking business activity. Second, net interest income. At the moment, the contribution of insured banking on the deposits is pretty low. It's in the range of 20, 30 million euros. We've just started with opening the current account, so we are just at the beginning. So at the moment, it's all about Banker General Clients. And for the pickup in cost, I will hand over to Tomasio.

Let's say that pick-up operating costs are more linked to the investments that we are going to make in the ATV platform, especially investing in AI. And then we have also some specific investments for the ALEANSA project that have been in in any case, accounted in the first half. And we expect also that in the second part, we are going to have, let's say, continuing on investing. That's why we see that for this year, we will have a spike in operating costs with a guidance which is updated. We will rate between 8% and 9%. So we expect the second half in line with the first one. At the same time, we expect that going forward, we can meet the six, eight guidance, which is the meeting term that we are.

And last, just to answer your question about net inflows, why we have rising the target for net inflows, not for the product needs, I said that here there is a conservative view on the trends of the markets for the second half. so we are not confident to see the same market as the first half so to be more conservative we prefer to confirm the guidance in terms of leaks that depends also in part from the market's dynamics while on the net inflows we see a very strong trend both for the existing stage force as well as for equipment so even in let's say more volatile markets we are confident to over-deliver compared to the targets at the beginning of the year.

Thank you. Thank you. Just if you can follow up on the deposit cost, because in terms of costs, I meant like what happened in the deposit cost Q&Q and what do you expect from here? Thank you for all the answers.

Deposit cost, let's say that evolution is linked to the beta of our deposit. Let's say that we have the 35% of our devolutes which are in line with – are linked to the EOEBOR evolution, the EOEBOR one-month evolution. And so that's the part which is going to follow the evolution of the markets. We expect, so, in the next quarter to have a small increase in terms of interest rates. We expect that the UREB for six months will increase around 30 basis points in the last quarter, especially we expect in the last quarter, in the fourth quarter of this year, the spike in interest rates. So this is going to give, let's say, an increase in terms of cost of funding of some basis points that we expect to have in the second quarter, but something which is already, of course, implied in our guidance, which we have confirmed between $335 million and $345 billion. We don't expect – yeah, let's say that we are more sensitive in terms of net interest margin evolution, more to volumes that to interest rate change because we have, let's say, for armed purposes now sensitivity to interest rate lower, and so we are more sensitive to what is the balance sheet dimension, and you can see that in the last month we had lower growth in the, let's say, in the liabilities, in the deposit, because we had increased the net influx in managed assets. So we have to also understand what will be the path of the investing of our client in next month to understand what will be the full impact in that interest market. We have based our guidance of stable volume of slightly increasing.

So to cut my story short, we haven't changed our way to pay back to the clients. and you know we have the assets that has a leg to update the value in line with the new scenario of the interest years. We have a duration below two years, so it takes a little bit more to adjust the assets and the liabilities, but nothing has changed.

Thank you very much.

The question comes from Davide Giuliano with Equita. Please go ahead.

Hi, good afternoon, and thank you for taking my question. I have three. The first one is on net inflows, if you can anticipate some details on net inflows for July. The second one, on the tax impact, you mentioned that you expect a return to the 27-28% range by 2028. Could you provide us some more precise guidance on tax rate for second half in 2027? and the last one on performance fee could you give us an indication of how many AUMs are close to the AI water market and assuming stable markets between now and the end of the year how much in performance fees can we expect, thank you ok so as I was mentioned in terms of net inflows for July we are confident to exceed half billion Second, the quality in terms of asset and investment is higher than in the past.

So also July is a pretty strong month, especially in the advanced advisory services, but we say that in more general terms, the asset and investment component is doing well. Second, in terms of tax impact, as I was mentioned, we are in discussion with Luxembourg authorities. My feeling is that Luxembourg will change the framework to incentivize asset management in Luxembourg. But whatever the decision of the Luxembourg authorities, as I show in the Business of the Day session, now we have great flexibility in organizing our asset management strategies. So we are confident for these two main reasons, discussion, positive discussion with Luxembourg and more flexibility in our asset measurement platform. And then Tomaso will give you some projection. And in terms of performance fees, they say that we still have important part of the assets that are close to the high watermark.

I will say that we are around, let me change just numbers, around 5 billion euro very close to the high network so I will come out Tommaso for the tax impact we expect to have a gradual reduction in Luxembourg so we will think that starting from 2007 to the next year we will have a positive impact because in Laxam there are two components in terms of taxation. One is the corporate tax, and the other one is the sort of municipal tax, which is the one that we expect to go down according to the discussion that we had with the ministers. And so we will have, basically, we expect to have full taxation in this year. We don't know if we will have a positive impact We cannot confirm we can have a positive impact in the next quarter, but starting from the next year, we will have a progressive reduction. Then we have on the other side the possibility also to manage and to, let's say, strengthen our presence in Ireland, so to have basically also from this contribution a positive impact on the total population.

The next question comes from Gianluca Ferrari with Mediobanca. Please go ahead.

Yes. Hi. Good afternoon. Two from you, please. The first one is on the net provision for risk and charges. It was a very low number. I was wondering if it was the reversal of the prudence you showed on Q4 or it is a new run rate. And if you can give us a guidance of where we should put provision for risk and charges for full year 26. The second is on custody and in particular on certificates. Just a curiosity for me, I was wondering if in Q2 you placed, you issued the plain vanilla certificates or you are now pretty active on the AMC, on the actively managed certificates. and if so, if Intermonte is a strong contributor to this business line. Thank you.

Thank you for the provision. I will hand over to Maso, referring a certificate. At the moment, numbers don't include AMC. We are working with Intermonte on some solutions with the protection for the clients and in the second half we will extend the contribution of Intermonte also on the other kind of certificates.

For provision, we expect that in the second half we will be more than less in line with what we have done in the in the first one we expect let's say we have for the full year we expect to stay around 50 million including also write-off and the contribution to to to the funds excluding of course exceptional items that at the moment which we don't have in mind. So, of course, there is a benefit if you compare what was the run rate in the previous year, but this is our expectation for the current year, around 50 million overall.

Thank you. Thank you very much.

As a reminder, if you wish to register for a question, please press star and 1 on your telephone. For any further questions, please press star and 1 on your telephone. Mr. Mossa, there are no more questions registered at this time.

Okay, so thank you for participating in our conference call. Let me finish by wishing you all a great summer.