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Edited Transcript of BGN.MI earnings conference call or presentation 30-Jul-19 12:00pm GMT

Half Year 2019 Banca Generali SpA Earnings Call

Trieste Aug 8, 2019 (Thomson StreetEvents) -- Edited Transcript of Banca Generali SpA earnings conference call or presentation Tuesday, July 30, 2019 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Gian Maria Mossa

Banca Generali S.p.A. - GM, CEO & Director

* Tommaso Di Russo

Banca Generali S.p.A. - Head of Strategy, CFO & Manager of Financial Reports

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Conference Call Participants

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* Alberto Villa

Intermonte SIM S.p.A., Research Division - Head of Analysts Team

* Elena Perini

Banca IMI SpA, Research Division - Research Analyst

* Filippo Prini

Kepler Cheuvreux, Research Division - Equity Research Analyst

* Gian Luca Ferrari

Mediobanca - Banca di credito finanziario S.p.A., Research Division - Security Analyst

* Luigi De Bellis

Equita SIM S.p.A., Research Division - Co-Head of Research

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Presentation

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Operator [1]

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Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Banca Generali First Half 2019 Results Conference Call. (Operator Instructions)

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.

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Gian Maria Mossa, Banca Generali S.p.A. - GM, CEO & Director [2]

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So good morning and thank you for attending our first half results conference call. The first 6 months were very strong. Total assets reached EUR 62.9 billion, a new record high. The total assets managed directly by our Luxembourg platform, a BG Fund Management, exceeded EUR 15.5 billion, and we set a new record high also on assets under advisory, EUR 4 billion. These results are driven both by good performance of the market as well as strong net inflows. As you already know, net inflows for the first half reached EUR 2.8 billion, of which 75% comes from the existing sales force, and this is the highest contribution ever for the existing structure to total inflows.

In terms of financial advisory networks, we exceeded 2,000 units, and we continue to see an increase in the average portfolio that exceeded EUR 31 million.

In terms of financial results, we are very satisfied. Reported net profit reached at EUR 132.8 million, thanks to asset expansion and a positive contribution from the market recovery.

Focusing on the core net profit. Let's say that core net profit increased by 12%, thanks to higher core revenues, in particular, positive contribution of net interest income, management fees and other fees.

On capital ratio side, we continue to have a very solid position, with both CET1 and TCR well above regulatory requirement.

Page 4 is our usual representation -- presentation of the main figures of our P&L. Total banking income increased 22%, thanks to a spike in net fees, plus 33%. During this first half, as you can see in the table, we had a temporary spike in operating costs, plus 7.7%, mainly driven by one-off and an acceleration of the investment for our strategic initiatives.

Moving below the operating line, we had lower charges, so around EUR 10 million more or less. The tax rate was at 17.8%, and so total net profit reached EUR 132.8 million. That is the second best first half ever.

Page 5, we have the build-up of net profit where you can see the positive contributors and the detractors to its performance. Positive contributors, we have performance fee, plus EUR 33 million; higher net interest income, plus EUR 5.5 million; and then the effect of asset expansion, plus EUR 10 million.

On the detractor side, the spike, of course, as already mentioned, plus, of course, higher taxes, in line with higher profits. And then you can see again the impact of IFRS 16 and IFRS 15 on the bottom line results.

Now moving on to Page 7, we'll go through line by line, starting from net financial income. Net financial income was in line with the first quarter at close to EUR 20 million, but with a higher contribution, as already said, from net interest income. Net interest income was gross at EUR 18.6 million. Once net of the IFRS 16 impact, we still have a very important number, EUR 17.7 million with a number for the full -- half year result at EUR 33.6 million. And we are pretty confident we have a significant positive contribution also from the second half. This increase of net interest income is driven by the yield, a partial recovery of the yield of the banking book, from 0.7 at the end of the last year, at 0.77, as well as asset expansion. So the consequent increase of the banking book from EUR 6 billion to EUR 6.9 billion.

If you look at the graph on the right, you can see that there was a temporary spike of loans to banks due to some events in the end of the first half, and we already invested part of this liquidity in July, confirming the positive trend for the future in net interest income.

Next page, we start with gross fees. Starting from management fees, we see a steady recovery from the bottom of the beginning of this year. The contribution of management fee is still lower to the last part of the last year due to a more defensive product mix with free margin at 1.4%, that is in line with the guidance of 1.38% to 1.42%. The positive news on this side is about an increasing interest for asset management products in June and in July. So we are confident to see an acceleration also of absolute value of management fees.

Page 9, other fees. Here, you can see that the increase from the same period the last year was even more important, from EUR 36.1 million to EUR 39.9 million. And this important acceleration is driven both by entry fees as well as banking fees. Entry fees were driven by an acceleration of structured product and certificate, while banking fees were mainly driven by the acceleration in asset under advisory.

Page 10, the last component of gross fees, so performance fees. In the second quarter, we had the same contribution as the first one, EUR 35.6 million, where the new performance fee mechanism accounts for more than 55% of total Luxembourg assets. And in the last 2 months, the contribution of the new Lux team is higher -- has been higher than the selection one.

Page 11, let's move to the fee expense on the cost side. So total payout was at EUR 191.4 million. That means EUR 10 million lower than last year. In particular, the payout to the network resulted below to 50% thanks to a reduction of the cost of growth because, as we already said, the existing sales force driven the inflows in the first part of the year. We had also a reduction in the payout to third parties, thanks to the renegotiation of the agreement with the external asset managers. Total payout ratio, excluding performance fee, at 54% from the previous 57% of the same period over the last year.

Page 12, we can see the operating costs. As we already said, we saw an overall increase of EUR 7.3 million. Parts of this increase are linked to one-off items: office moving, M&A and the implementation of IFRS 16. The amount is EUR 1.9 million. Net of this one-off, the cost would have been up by 5.7%, and this includes, for example, EUR 1 million of extra investment to accelerate structural initiatives.

If we look at the breakdown of core operating costs, on the graph on the right of the slide, you can see the impact of IFRS 16 adoption. In particular, depreciation, the impact was at EUR 8.8 million, while in G&A, we had a reduction of EUR 9.5 million. In the annex, you have the details of this impact.

Next page, Slide 13, we see the ratios. Operating costs out of total assets reached a new low at 0.32%, and cost/income also once net of extraordinary components is at 40%. We continue -- we represent best practice in the market.

Page 14, capital position. CET1 ratio and TCR ratio, respectively to 15.7% and 17.1%. Consider that first of all, 100% of interim profit has been set aside for the new dividend policy. And both capital ratios include the first-time application of the IFRS 16, and the impact is between 0.8% and 0.87%.

Liquidity. Ratios are very, very high. Much higher than the regulatory requirement, and the leverage resulted at 4.5%.

So just to recap. From a financial perspective, all the core components are growing and are gaining momentum. We had a positive impact from net interest income, and we are confident to see further acceleration in the second half. We saw steady growth of assets under management fees. And again, good news from the last weeks, an acceleration in the inflows -- in the quality of the inflows. All the new initiatives are working well, increasing the contribution of both banking fees as well as entry fees.

So now let's move on to the commercial results, net inflows, assets and recruitment, starting from Page 16. As we already announced, we reached a new high in terms of total assets, EUR 62.9 billion. This is driven both by positive inflows as well as very important performance of the asset management products. In these first 6 months, the performance -- the average performance was at 7%, more than offsetting the negative performance of the second half of the last year.

On the top right of the slide, you can see the breakdown of managed solutions. All the different investment solutions grew in the period, exceeding the levels of last year. And again, all the initiatives are accelerating.

Bottom right, you can see the banking assets. We break down also the banking assets to show also the acceleration in asset under custody that is driven both by the performance of the market as well as inflows.

If you move on to Page 17, there is the breakdown of net inflows in assets under custody. And here, you can see good news. First of all, we confirm the good results of securitization, EUR 0.3 billion, and we see an acceleration in certificates that almost doubled the results of the last year. All in all, the contribution of assets under custody to total net inflows was in line with last year.

Another positive achievement was about our Luxembourg platform. You know that one of our core pillar of the strategy announced in December of last year was a focus on retail distribution over our in-house products, and we see a tremendous interest in these solutions, in particular, in the second quarter, and we achieved more than EUR 1 billion of total assets in the retail distribution. And this is probably the best number for years for the bank. And again, in July, we can confirm a positive trend in our retail distribution platform.

Page 18, a focus on recruitment. You remember at the beginning of the last year, we announced a gradual reduction of recruitment activity. Numbers for the second half of last year were about 40 new colleagues. In this first half, we were in line with the second half of the last year, so plus 43. Say that in autumn, we will consider the opportunity to reaccelerate gradually the recruitment activity. Why we slowed down the recruitment activity in these last 12, 18 months? Because we have 2 main reasons. The first one because we wanted to be very cautious to the phasing and implementation of MiFID review, as you know. And second, because we wanted to be fully dedicated to the activity of our existing sales force. And the results were impressive. On the graph on the right of the page, you can see the total contribution of the existing sales force, 75% compared to 58% of the previous year. And also, the negative contribution of the financial adviser out was at the lowest level ever for the bank.

So Page 19 is a focus on our FA networks in terms of numbers, in terms of trends. On the left, you can see that we achieved, let's say, that our FA Network counted 2,022 financial advisors, 2/3 of which manage more than EUR 15 million. That is the floor to us to do this kind of business. And they all account for more than 90% of total AUM, achieving well in advance the target of having financial advisors with more than EUR 15 million above 90% of total AUM. Why this achievement? Because we continue to grow selectively. Thanks to ordinary recruitment, we have a very, very low churn rate. So if you look at the graph -- the trend in the top right of the slide, you see how constant was the growth of the financial advisory network. On the bottom of the page, you see that the quality is still increasing because the difference between us and the market is widening. Today, the difference -- for us the data at the end of the first half for the market and at the end of the first quarter is above EUR 11 million per financial advisors. Five years ago, it was less than EUR 7 million. So there is an increase of almost 50% in terms of portfolio average. So basically, the commercial activity is very sound and of great quality.

Probably, we can start seeing -- we will see some seasonal effect on the inflows. We saw a slowdown in the inflows in these last 2 weeks, and probably, it will be the same in August. But we are confident to see a gain in acceleration in September, October and for the last part of the year. So we will wait for the trend in the next few weeks to decide whether confirm or increase the target of total net inflows for this year.

Last part of the presentation is about an update of the main initiatives on assets under advisory, assets under custody and assets under management.

Starting from assets under advisory, numbers are well above the plan with, in the first 6 months, EUR 1.7 billion of new contracts. This leads total assets under advisory at 6.5% of total assets. Why this acceleration? For 2 main reasons. The first one is that we continue to be innovative and to have some -- say, some tools that are unique in the market. And second because we provide these kind of services in a very diversified way, with 3 main different value propositions. The first one is about pure financial. We completed the rollout of our robo-4-advisory tool, fully integrating the tool provided by UBS but with a very, very high degree of personalization and are fully integrating in our BG Personal Advisory platform. And we strengthened our market strategy team. So there is a growing interest in these kind of activities and services in the assets under custody and asset management products.

Family office. This is probably one cutting-edge solution with our proprietary platform. We continue to upgrade the platform, and there is a growing interest in both real-estate advisory as well as succession planning. We start covering also corporate advice, and there is great interest from our 8,000 clients that are all entrepreneurs.

Securitization. This is a confirmation of the right choice of the last year. Growing interest and well diversification among the clients willing to subscribe to these kind of products. We are talking about professional and institutional clients. The goal is pretty clear: All these kinds of innovation is to provide upselling to ordinary individuals and private clients; to focus more and more the attention of our clients and of our financial advisors also on assets under custody; and at the end of the day, to increase diversification in the revenue stream.

Next page, assets under custody. What really impressed me in the first 6 half of this year was about the asset, stock and bonds, transferred from other financial institutions.

If you look at the graph on the left of Page 22, you can see that the activity of the existing financial advisors in transferring, let's say the assets under custody increased by 55%. So it means that if we maintain this path, we should have more than EUR 1 billion of net inflows, only from the transferring of stock and bonds. And this is thanks to the focus of their attention also on assets under custody, driven by the BG Certificates hub, the BG Personal Advisory, RO4AD Advisory as well as the first release of BG SAXO. In June, we start offering BG SAXO platform to the existing clients. In particular, the one provided by -- the platform is provided by our financial advisors. The feedback are very important. And we are very confident to see an acceleration also on the brokerage fees, in particular, in the second part of the year, with the full impact in the first half of 2020 because we will launch BG Investor. It is a simplified version of the app of BG SAXO. And second, because we will introduce both the B2C business, dedicated to traders and derivatives also for hedging strategies. So again, the goal is to be best-in-class also in providing advice on assets under custody, diversifying again the revenue streams, thanks to all the projects that we announced last year and now are up and running.

The last part is about assets under management. This is our core business, our core activities. On the left graph on the page, you can see the recovery of our Luxembourg asset. In particular, we achieved EUR 15.6 billion. And again in July, we saw further -- we are seeing further acceleration. But the most important news is about our retail distribution. You see the red bar reached EUR 6.3 billion, so changing the trend and reaching a record high compared to numbers in 2017. We'll continue to focus on retail distribution, considering that in September, we will complete the journey of Lux IM with the third wave.

Total BG fund management assets out of total AUM is around 53%. It is well balanced, and consider that 80% of our total assets in Lux IM are managed directly by third parties.

We are very focused on maintaining great diversification of the underlying of our Luxembourg platform. And you can see the pie where, of course, we have equity ratio, equity funds as well as thematic funds, real assets and bond strategies. Let's say that for us, asset under management is not just about funds, but it's also about portfolio management solutions and unit-linked.

On the first topic, portfolio management solutions, we completed the innovation of new dedicated investment solution, both introducing ESG concept as well as dedicated solution, a liquid solution, for top clients. And we organized a roadshow that will conclude in -- will be completed at the end of May and the beginning of June. And while in insurance, we are very, very close to launching a new initiative, a new version of our unit-linked BG Stile Libero, with even higher flexibility.

So at the end of the day, the focus is to provide upselling and cross-selling for ordinary individuals as well as focusing more and more on savings.

For the first time, we will launch saving, planning, recurring plans, both for single funds as well as unit-linked. So on one end, focus on investment solutions for private clients and ordinary individuals. On the other one, focus on saving plans, saving investments for affluent clients. And you know, this is a very important part of our customer base that we haven't provided this kind of solution in the past. And now we are very, very focused also in developing this kind of opportunity and business.

So just to wrap up. As you can see, we are working on several projects. You know that our 3-year plans is a multiproject approach where we have initiatives in asset under advisory, initiatives in asset under custody and initiatives in asset under management. And we aim at increasing the diversification of revenues and expand the opportunity set for our financial advisors to cross-sell and upsell. The focus is to strengthen the long-term relationship between our financial advisors and our clients. The most interesting thing is that almost all the initiatives are up and running, and are providing great results. So this is the reasons why I continue to be very optimistic for numbers for the next months.

Thank you. And now we are ready to take any questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from Gian Luca Ferrari with Mediobanca.

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Gian Luca Ferrari, Mediobanca - Banca di credito finanziario S.p.A., Research Division - Security Analyst [2]

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Gian Maria, 3 questions. The first one is on NII of EUR 33.6 million. If I understood it correctly, you said there could be an acceleration in the second part of the year. I am a bit surprised because you are mainly investing in 2 year-duration BTPs with 3.5 years maturity. So how can you even accelerate such a strong number you printed for the first half '19? And I think during the Q1 conference call, you guided for EUR 65 million NII in full year '19. Can you share with us a number for full year '19? And it could be also really appreciated an estimate for 2020.

The second question is on entry fees. About certificates, I think there are a lot of comments in the market around how these products are charged. I think you are basically selling 3-year certificates with a 1 percentage point per year in terms of charge. Can you confirm this is the kind of remuneration you are getting on certificates?

And the third and final question is on the banking license in Switzerland. Is there any update on that specific topic, or you are still in the market looking for opportunities?

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Gian Maria Mossa, Banca Generali S.p.A. - GM, CEO & Director [3]

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Thank you, Gian Luca. So starting from net interest income, you are right. The environment is much worse than in the past. But let's say that we haven't seen yet the full impact of the investments during the second quarter and the expansion of the total banking book, so we are confident to exceed EUR 65 million full year results and we think a positive contribution also for 2020.

On the certificate side, you are right. It's 1% per year. Here, you have several good news. The first one is that each client invests normally 2-, 3-year certificate, and we have a positive turnover. So it's difficult to think of waiting for the maturity of these certificates. We are investing also in tools to provide advisors in the secondary market.

Third question, banking license. No news. We are continuing the scouting. We organized a meeting with several banks. There is a great interest on our initiatives. Valeur. We are close, for the Valeur deal, at the end of September and beginning of October. And we have a target of the first quarter of next year to decide on the banking license. Thank you.

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Operator [4]

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The next question is from Elena Perini with Banca IMI.

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Elena Perini, Banca IMI SpA, Research Division - Research Analyst [5]

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I've got some questions. First of all, coming back to the entry fees. So would you expect them to be so high and robust, even in the significant part of the year? Then on performance fees, I was wondering if you can update us on your performance fees in July. Then probably I lost something about the one-off on costs, so if you can make some sort of a recap of the one-offs in the second quarter. And then about your pro-forma assets of EUR 65 billion, I was wondering if you could provide us with the breakdown between assets under management and the traditional banking products.

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Gian Maria Mossa, Banca Generali S.p.A. - GM, CEO & Director [6]

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So thank you, Elena. First of all, entry fees, we think that the second half will be even stronger than the first one because the second quarter was much higher than the first quarter. You have to consider 2 different components. I'm very positive on certificate. So we can confirm the trend over the second quarter, with some seasonality due to [owes]. While the entry fees, the traditional entry fees are more linked to the market. So in that case, there is some seasonality linked to the market. So for what we can manage, these certificates and structured products, I continue to be very confident.

On performance fee. July is still positive. When we are above EUR 10 million, already got.

For the one-off, there are 3 main components. The first one is about moving, so from the previous building in Via Bassi to CityLife. The second one is about M&A, of course, the cost incurred in the acquisition of Nextam and Valeur. And the third is about the full implementation of the IFRS account. I don't know if Tommaso wants to give you more flavor.

I'll start answering you also on the fourth question. EUR 63 billion becomes EUR 55 billion including also Nextam and Valeur. If we consider EUR 63 billion, we have 73% -- above 73% in asset management product and insurance solutions.

Tommaso, if you want to give the breakdown of the one-off or more flavor?

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Tommaso Di Russo, Banca Generali S.p.A. - Head of Strategy, CFO & Manager of Financial Reports [7]

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Well, I think that the main important thing on cost is that we have done an important acceleration of the project, which are not included in the one-off. For example, the expenses for SAXO project is included in the core cost, and they account for more than EUR 1 million in the first half of the year. So I think that we can confirm also the guidance in terms of growth of the cost, between 3% and 5% in the next 3 years. Of course, in this year, we are going to be in the higher part of the range, for the end of 2019.

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Operator [8]

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The next question is from Alberto Villa with Intermonte.

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Alberto Villa, Intermonte SIM S.p.A., Research Division - Head of Analysts Team [9]

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Congratulations for the results, which are very strong. I wanted just to have a couple of comments. One is on the feedback from your clients from the MiFID II disclosure. I think I've been told you're sending it, especially online, the reports on MiFID II on 2018. I was wondering if you have any kind of, let's say, feedback from customers and from the financial advisors about the additional disclosure on cost, and if that is maybe masked in the short term where you have a very strong performance. You are delivering in the first half of 2019, but maybe an issue in the future or not. So this is the first question.

The second one is on Slide 21 when you gave us an update on the assets under custody, and I'm quite impressed by the acceleration you had in the first half of 2019 on that. And was wondering if your target for 2021 looks, say, kind of cautious now. And if you can just give us an idea what is the additional contribution to revenues of this kind of activity, and so what we can expect going forward coming from the assets under advisory business.

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Gian Maria Mossa, Banca Generali S.p.A. - GM, CEO & Director [10]

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Thank you, Alberto. First of all, we'll start from the feedback from clients. I have the impression that more than 50% of the clients has already -- they have [waived] the costs. And the feedback was pretty positive also because, as you mentioned, performance of the first half of this year helped a lot. The most important thing is that our financial advisors look very relaxed on this topic because we worked a lot in the last year with training them, and they see also the positive side, that it means that you have the rest of 95% of the market waiting for the report. Probably now we are managing our clients, but there will be a moment where we cut back.

For assets under advisory, I was really impressed. I was really, really impressed by the numbers. I'm very confident on securitization. I'm very confident on family office. What impressed me more was about the integration of this robo-4-advisory tool of UBS because we're ranging -- we have platforms starting from risk, and this approach likes a lot [too] both in the network and the clients. Probably in September/October, we will increase our projection for the 3-year plan. The profitability is pretty good. It is above 40 basis points. We are, at the moment 46. There is a growing interest. Almost -- more than 1,000 financial advisors started working also with this approach. So we are confident. We want to wait for the autumn to review our targets. Thank you.

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Alberto Villa, Intermonte SIM S.p.A., Research Division - Head of Analysts Team [11]

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This is very helpful. Gian Maria, when you talk about the 46 basis points, should we have to consider what you have to rebate to the network?

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Gian Maria Mossa, Banca Generali S.p.A. - GM, CEO & Director [12]

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40% for the network.

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Operator [13]

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The next question is from Luigi De Bellis with Equita SIM.

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Luigi De Bellis, Equita SIM S.p.A., Research Division - Co-Head of Research [14]

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I have 3 questions, if I may. The first one on the management fees on assets under management and the payout ratio. How do you see this trend in the coming quarters? Do you think to maintain the run rate of margin registered during the first half? The second question, also on the fee expenses. Could you explain why there is a small increase of ordinary payout in percentage with a more cautious mix of assets under management? And the last question, could you explain the driver behind the trend of common equity Tier 1 ratio quarter-on-quarter?

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Gian Maria Mossa, Banca Generali S.p.A. - GM, CEO & Director [15]

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Okay. Thank you, Luigi. Let's start from the first question on management fees. If you consider our Luxembourg platform, the payout ratio is lower than the average that we presented in the slide. So an acceleration in the distribution of retail fund will provide support to maintain that level. The increase is more linked to assets under advisory, where the payout ratio is at 40%. So the great interest in the first half of the year in assets under advisory increased marginally the payout ratio. We are confident to maintain this level, the range is 36% to 37%, thanks to continued acceleration of assets under advisory as well as an acceleration on the retail distribution of funds.

While the part of payout ratio linked to growth, we are confident to confirm this level for the second half. Of course, an increase in this part would be linked to an acceleration also in recruitment, but at the moment, it's not still the case.

For CET1, as I mentioned -- CET1, as I already mentioned, you have 2 different topics. The first one is the 100%, let's say, 100% of interim profit set aside. And this would impact 0.8, more or less. The 100% of interim profit was set aside for dividend policy, without any positive impact on capital ratio, so 0.8. And then you have the first implementation of IFRS 16 that you account for 0.8, 0.87 depending on the capital ratio. And then we start investing and diversifying the banking book. So the gap is excluding 100% of interim profit set aside. And the IFRS 16 is linked to the higher diversification of the banking book.

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Operator [16]

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The next question is from Filippo Prini with Kepler.

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Filippo Prini, Kepler Cheuvreux, Research Division - Equity Research Analyst [17]

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Two questions. Still on performance fee of July. Is it correct that the large part of the result that you achieved is coming from the latest launch Lux IM? And if you can please repeat when do you plan to launch the final wave of the new Lux IM.

And the second question is on -- basically we see that your liquidity -- so basically, the loans to banks, has increased further at the end of June compared to end of [month]. So if you plan to reinvest this excess of liquidity, again, into new investment portfolio? And if for 2020, do you plan to increase in some way instead your lending portfolio that has constantly remained stable?

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Gian Maria Mossa, Banca Generali S.p.A. - GM, CEO & Director [18]

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Thank you, Filippo. First of all, performance fee. The contribution of July, the dimension is 100%, driven by Lux IM. We have a couple of EUR 3 million of BG Selection. You know the expirization of this will be at the end of July. So almost all -- 90% of the assets are at high-water mark level of the Lux IM. Second, the third wave should be the last one. It will be announced to the network through our convention in September 15. And about liquidity, we had some exceptional factors at the end of June. After a few days in July, total liquidity was below EUR 1 billion. That is the threshold that we have in mind, much lower than EUR 1 billion, because part of the increasing the net interest income is linked to an optimization of the liquidity of the bank. So we'll continue investing in liquidity, reducing the cost of this part of the balance sheet.

For 2020, the question was...sorry?

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Filippo Prini, Kepler Cheuvreux, Research Division - Equity Research Analyst [19]

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If you plan to give a boost to your lending portfolio.

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Gian Maria Mossa, Banca Generali S.p.A. - GM, CEO & Director [20]

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Okay. Lending. Let's say that -- probably, if you look at the strategy that we launched in December of last year, the only one that is lagging is credit because we want to be ready from an IT perspective for the automatization of all the process. So we're going to launch the new [Mini Lombard] for affluent and upper affluent clients in the first quarter of the next year, and we are pretty confident to see an acceleration also for this kind of project.

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Operator [21]

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(Operator Instructions) The next question is a follow-up from Elena Perini with Banca IMI.

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Elena Perini, Banca IMI SpA, Research Division - Research Analyst [22]

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Yes. Just a quick question on the net inflows. You mentioned a slowdown in this month. Well, I imagine that this is more related to the banking products or -- well, low-margin products, if you can confirm it.

And then about your guidance. If I remember well, you guided for EUR 4 billion to EUR 4.5 billion. So are you going to upgrade it, so in the highest part or even higher than this one?

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Gian Maria Mossa, Banca Generali S.p.A. - GM, CEO & Director [23]

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Thank you, Elena. Let's say that net inflows are influenced by summertime. So in July, we still see very positive inflows. I think we'll be close to EUR 300 million, where almost all are invested in asset management solutions. So the quality of numbers in July are probably the best for the year. And then we see this growing interest in our Luxembourg offering and on also the insurance wrapper. So the quality is probably the best. Total interest are still very strong. We're just seeing a deceleration in these last 2 weeks. And probably, as usual, in August and at the beginning of September, it will be a little bit lower than the average. Because we started the year very, very strongly and without the contribution of recruitment, so the numbers are really, really impressive. So we maintain our projection of the range EUR 4 billion to EUR 4.5 billion until October. And at that time, we will consider the opportunity to increase our projection after having analyzed the numbers also in August and September. Thank you.

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Operator [24]

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Gentlemen, there are no more questions registered at this time.

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Gian Maria Mossa, Banca Generali S.p.A. - GM, CEO & Director [25]

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Okay. So thank you for attending our conference call, and goodbye to the next caller. Bye.