Banca Generali Banca Generali 1H 2011 Results and business update 1H 2011 Results and business update Milan, 29 July 2011
� 1H 2011 Results � Net Inflows, AUM and recruiting � Business Update � Closing Remarks 2 Banca Generali 2011 First Half Results
1H 2011 Results 1H11 results proved very solid when considering the sharp increase in the volatility of financial markets A safe harbour in a stormy weather Net profit (€ m) Proven ability to deliver growth: Net inflows Gross of one-off topped €579 m in 1H11 (close to the 1H10 tax gains level), even if market conditions proved much 43.7 (1) less favourable. N°1 in the sector for net inflows -14% in managed assets 37.4 6 mln Steady net result: 1H11 net profit broadly matched 1H10 level (excluding the 1H10 one- -0.8% off tax benefits), as the increase in 37.7 37.4 management fees and the cut in operating costs offset lower market-driven revenues Net of one-off tax gains (€11.0 mln vs. €35.7 mln in 1H10, -69% yoy) 1H 11 1H 10 Enhanced fees sustainability: 91% of total income (and even 97% of gross commissions) one-off tax gain is made up of recurring items (1) Including a €6m one-off tax gain Effective cost control: management keeps a tough hand on operating costs (-3% yoy) Results are driven by operating Strong capital and Banking Book: solid excess business, while contribution from capital, very safe banking book (duration less “finance” is near to zero than 1 year, floating rate at 52% of total, no asset/liability mismatch). No volatility transfer to P&L from the banking book 3 Banca Generali 2011 First Half Results
1H 2011 Results Total income impacted by the unfavourable trend in financial markets offset by the strong growth in the recurring business Analysis of variation in net profit (€ m) The instability of the Strong contribution financial markets is from recurring affecting market business related items Recurring 43.7 commissions strongly up Organic growth is generating 37.4 lower provisions (4.1) Performance (17.2) Tough hand 10.2 fees on costs Still large unexploited operative Trading 11.3 (7.5) leverage income 1.9 (0.9) 1H11 1H10 Market NII Net recurring ∆ in Taxes Cost related savings provisions/ commissions (1) items impairments (1) management, front and banking fees 4 Banca Generali 2011 First Half Results
1H 2011 Results Consolidated 1H 2011 Profit and Loss Account (€ m ln) 1H10 1H11 % Chg 1 H10 1 H11 % Chg (rep ort ed) (report ed) (excl. GIL) (excl. GI L) N et I nte re st I ncom e 2 2 .4 2 1 .5 - 3 .8 % 2 2 .4 2 1 . 5 -3 .9 % � Interest margin lower on a Com m ission incom e 183.1 181. 3 -1 .0% 170 .4 166 .5 -2.3% reported basis, as the switch towards managed assets reduced Com m ission exp ense -76.2 -81.2 6.7 % -66 .8 -69 .9 4.6 % assets parked in current accounts N et Com m ission 1 0 6 .9 1 0 0 .1 - 6 .4 % 1 0 3 . 6 9 6 . 6 -6 .8 % Net incom e (loss) from t rad ing activities -31.0 -51.9 6 7.1% -31 .0 -51 .8 67.0% � Buoyant growth in management fees (+20% yoy) offsetting Dividends 4 4.4 5 7.7 2 9.8% 44.4 57.7 29.8% weak performance fees linked to Net incom e (loss) from t rad ing activities and Divid ends 1 3.4 5.8 -56.5 % 13.4 5.8 -56 .3% the poor trend in financial markets N et Ba nking I ncom e 1 4 2 .6 1 2 7 .4 - 1 0 .7 % 1 3 9 . 3 1 2 3 .9 -1 1 .1 % � Trading income decreases from Staff expenses -33.8 -34.3 1.5 % -32 .8 -33 .3 1.6 % the one-off peak of last year Ot her general and adm inistrative expense -43.3 -40.8 -5 .9% -43 .1 -40 .6 -5.8% � Enhanced quality of total Depreciat ion an d am ort isat ion -2 .0 -1 .9 -4 .5% -2.0 -1.9 -4.6% revenues , as recurring items Total costs -79.1 -77.0 -2 .7% -77 .8 -75 .8 -2.6% represent 97% of the total Cost / I ncom e Ratio -49.9% -54.4% -4 ,5 p.p. -50.2 % -55.0 % -4,8 p.p. � Operating costs decrease in Ot her net operatin g incom e ( expense) 6.0 5.8 -3 .0% 6.0 5.8 -3.0% absolute value , thanks to more Oper a ting Profit 6 9 .5 5 6 .2 - 1 9 .1 % 6 7 .4 5 3 . 9 -2 0 .0 % savings at G&A level Net adjustm ents for im pair.loans an d other assets -2 .2 -1 .7 -23.3 % -2.2 -1.7 -23 .3% Net provision s f or liabilit ies and cont ingencies -20.9 -9 .9 -52.7 % -20 .9 -10 .0 -52 .0% � Provisions are down, reflecting Profit Be for e Tax a tion 4 6 .4 4 4 .6 - 3 .9 % 4 4 .4 4 2 . 2 -4 .8 % lower costs of recruiting and higher share of organic growth Direct incom e taxes -0 .9 -5 .0 479. 7% -0.7 -4.8 612 .9% Tax rat e 1.9% 11 .3% 9,4 p .p. 1.5 % 1 1.4% 9,9 p.p. � Net profit down yoy, as 1H10 I ncom e/ (losses) aft er t ax on assets held for sales 0.0 0.0 # DI V/ 0 ! 0.0 0.0 # DI V/ 0! benefitted from a one-off tax- benefits Minorities interest -1 .8 -2 .2 1 7.6% 0.0 0.0 # DI V/ 0! N et Profit 4 3 .7 3 7 .4 - 1 4 .4 % 4 3 .7 3 7 . 4 -1 4 .4 % Figures “ex-GIL” do not incorporate the contribution of Generali Investment Luxembourg (“GIL”), the management co. of Assicurazioni Generali merged with BG Investment Lux on September 9, 2009 5 Banca Generali 2011 First Half Results
1H 2011 Results Revenues look more and more solid as the share of recurring income increased by 9% yoy and now represents 91% of total income Recurring income 1 Breakdown of Net Banking Income (LfL) (€ m) -11% (€ m) 112.9 +9% 139.3 103.6 123.9 22.3 (16%) -4% 21.5 (17%) 1H10 1H11 (1) management, front and banking fees + interest margin -7% 103.6 96.6 (74%) (78%) Recurring Income/Total income -56% 91% 13.4 (10%) +17 p.p. 5.8 (5%) 74% 1H10 1H11 Net Commissions Net Interest Income 1H10 1H11 Trading and dividends 6 Banca Generali 2011 First Half Results
1H 2011 Results Recurring commissions make up for 97% of total gross fees Quarterly management fees (LfL) Breakdown of Gross Commissions (LfL) (€ m) +16% (€ m) -2% 66.4 65.3 170.4 63.4 60.1 166.5 22.3 57.2 5.1 (3%) 52.1 (13%) 13.4 (8%) 18.6 (11%) 1Q 2Q 3Q 4Q 1Q 2Q 131.7 2011 2010 (79%) +20% 109.3 (64%) Trend in Recurring Commissions (LfL) 170.4 166.5 20.2 (12%) 16.3 (10%) 97% +9% Recurring gross 87% commissions 1H10 1H11 Non-recurring Banking Revenues revenues* Management Fees Non-Recurring 13% Performance Fees Front Fees gross commissions -77% 3% 1H11 1H10 (€ m) 7 Banca Generali 2011 First Half Results
1H 2011 Results Healthy increase in net commissions, with a stable pay-out ratio Pay-out * (LfL) Net Commissions * (LfL) 91.5 +13% 45.1% 81.3 43.3% 1H10 1H11 1H10 1H11 * Excluding performance fees * Excluding performance fees (€ m) Total net commission decreased by 6.8% yoy, Total net commission decreased by 6.8% yoy, The pay-out remained broadly stable, The pay-out remained broadly stable, but are actually up by 13% when stripping-out but are actually up by 13% when stripping-out with minor changes with minor changes performance fees performance fees 8 Banca Generali 2011 First Half Results
1H 2011 Results Overall a satisfactory result coupled with a very defensive investment strategy … reflecting decreasing assets parked Interest Margin (LfL) in current accounts slightly down yoy… -11% 1.8 1.7 1.6 22.4 21.5 -7% -7% -3.9% 1H10 1H11 1H10 FY10 1H11 (€ m) (€ bn) � The investment portfolio remains highly defensive with an average maturity of 3.0 yrs and a duration of 1.0 yrs � The investment portfolio remains highly defensive with an average maturity of 3.0 yrs and a duration of 1.0 yrs � Floating rates account for 52% of total investment portfolio � Floating rates account for 52% of total investment portfolio � The bank has no financial leverage nor any asset/liability mismatch � The bank has no financial leverage nor any asset/liability mismatch 9 Banca Generali 2011 First Half Results
1H 2011 Results Excellent cost management continues in 2011, with a decrease of 3% in operating expenses Operating Costs Breakdown (LfL) Staff costs Operating Costs/AUM Increase due to the renewal of the 33.3 national contract. 32.8 The headcount is 77.8 0.34% -3% stable 0.32% 75.8 +2% -2 bps 42% 44% 1H10 1H11 1H10 (€ m) 1H11 Cost/Income G&A Expenses 54% 55% 55.0% (€ m) 50.2% 43.1 40.6 +4.8 p.p. 3% 2% -6 % 1H10 1H11 1H10 1H11 €1.4m linked to the increase in the stamp G&A Expenses Staff duty on security deposits (due to the recently approved Budget Law). This cost (€ m) Depreciation and amortisation is then recovered from clients and 1H10 1H11 classified as “other income” in the P&L � In 1H11 operating costs fell in absolute value, in line with management commitment � Total costs fell by 3% yoy, driven by a cut in G&A expenses 10 Banca Generali 2011 First Half Results
1H 2011 Results Recurring Profitability further improving compared to the same period of last year AUM Profitability (LfL) Management fees contribution to AUM profitability 1.72% 1.59% +15 bps 0.20% 0.04% 1.12% 1.02% 1.47% 1.37% 1.32% 0.97% 1.55% 1.52% +5 bps 0.20% 1H10 FY10 1H11 0.27% 0.18% 1H10 1H11 Performance Fees Recurring commissions Interest margin … Recurring profitability 11 Banca Generali 2011 First Half Results
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