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Edited Transcript of BGN.MI earnings conference call or presentation 31-Oct-19 1:00pm GMT

Q3 2019 Banca Generali SpA Earnings Call

Trieste Nov 8, 2019 (Thomson StreetEvents) -- Edited Transcript of Banca Generali SpA earnings conference call or presentation Thursday, October 31, 2019 at 1:00:00pm 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

* Anna Adamo

Autonomous Research LLP - Partner of Italian Banks & Asset Managers

* 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 - Equity Analyst

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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 9 months 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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Thank you. Good morning, and welcome to our third quarter results conference call. And let me start saying that the bank is really, really in good shape. Reported net profit achieved EUR 196 million, of which EUR 103 million on -- EUR 103 million of core net profit. These numbers has been driven mainly by market expansion, great results from all the new revenue streams and asset expansion.

At the end of September, total assets reached almost EUR 66.1 billion. Total assets increased also for the acquisition of Valeur. We have just signed the closing in October, which reached EUR 67.2 billion. And this implies an asset expansion of almost EUR 10 billion. I think that the best result is in terms of inflows. The quality, more than 74% comes from the existing sales force and the quality of our financial advisers continue to increase, with a portfolio average about EUR 32 million.

The numbers are pretty impressive. What impressed me more, and I'm very proud of that is the quality or the engine that we launched in the last 12, 18 months to accelerate the revenues are working very well and are beyond our expectation. Lux IM, in particular, with the distribution to their retail structured product, advisory fee and retail brokerage fee.

As usual, at Page #4, you see the detail of the P&L, starting from the operating profit up to -- up 34.1% where the main contributors were the net interest margin and the net fees. Net fees planned, thanks to, of course, performance fee as well as a higher contribution of all the other revenues and lower cost of growth.

Total operating costs up 8.6%, of which an important part driven by M&A and one-offs, while already, let's say, the lines below the operating results are a positive contribution for the year.

Tax rate, a little bit higher than the same period of the last year at 17.4% compared to 16.4% of the first 9 months -- sorry, 17.4% compared to 19%, so it's positive, sorry.

Page 5, you see the buildup of the net profit, that is the split between variable profit and recurring profit. Variable profits jumped, thanks to an increase in the performance fee that more than offset the lower contribution of the trading gains. While, as you can see, the main contributors to the recurring profit comes from almost EUR 10 million, with increase in net interest income and EUR 20 million coming from asset expansion, new revenue engines and lower cost for growth.

On Page 7, we go through this, every single line, starting from net financial income comparing the first 9 months of this year to the first 9 months of last year. You see that the net result is a little bit lower, but the mix is much more important. Net interest income up to EUR 56.5 million and trading income at EUR 9.3 million.

Focusing on the quarterly trends, the third quarter was very, very strong with net interest income at EUR 20.3 million, once included the impact of IFRS 16. And we are confident to be around this number also for the last part of the year, while the trading income confirms the projection at EUR 3 million, EUR 4 million per quarter and totally above EUR 10 million.

Why this impressed the acceleration of net interest income, 2 main reasons. The first one thanks to the maturity of part of the portfolio. We have invested higher rate. And second, the asset expansion. Asset expansion, total balance sheet exceeded EUR 11.8 billion, of which EUR 7.9 billion are financial assets. And in terms of net interest margin, we accelerate from 0.77% to 0.85%. So to say that for the fourth quarter, we are positive and despite the reduction of the yield because we had several maturities, and we reinvested part of the previous maturity at a higher yield.

Moving on Page 8. We start with gross fees. Main component management fees, best quarter ever for the bank, EUR 163.2 million in terms of total contribution for the first 9 months. The total contribution is slightly lower compared to the last year. But also, in this case, we are very confident to close the year, definitely higher than the last year. In terms of margin, you can see a gradual recovery from 1.40% to 1.41%. You see like-for-like because from this quarter, we start including also next 10 results. Also in case of management fees, most part of the increase comes from an acceleration of the asset expansion, in particular, in our Luxembourg class.

Page 9, probably the best news of the day comes from other fees. If you look at the first 9 months, they are almost at EUR 60 million compared to the EUR 51.4 million of the full year 2018, with raising contribution of both banking fees and entry fees. Focusing on the last quarter and due to some seasonal effect comparing it with the third quarter of the last year, you see an impressive acceleration of both entry fees from EUR 3.6 million to EUR 5.2 million and banking fees from EUR 11.6 million to EUR 14.7 million.

In terms of margins, if you compare the first 9 months 2019 with the first 9 months 2018, you see an improvement, in particular, is more impressive on a quarterly basis. At the beginning third quarter 2018, we were at 10 basis points; third quarter 2019, 13 basis points. And again, here numbers are very, very impressive and focusing on October, we see a further acceleration.

Last part of gross fees focused on performance fees. Overall, EUR 96.3 million, with a contribution for the fourth -- for the third quarter at EUR 25.5 million. And of course, in absolute terms, this is very impressive. It's important. It's an important contribution. In terms of percentage on total AUM, the margins are at 0.28%. That is far below the average over the last 5 years. And so again, also in performance, we are linked to the asset expansion. Almost 60% of this performance fee comes from the new offer, the new Lux IM offer.

On the fee expense side, Page 11, you can see that the total fee expense moved down, mainly thanks to lower cost of growth to EUR 288 million compared to the previous EUR 301 million. Looking at the breakdown, starting from the payout to the network. Overall down, slightly higher organic payout and definitely lower cost of growth. And again, this is linked mainly to the quality of the inflows, most of which coming from the existing sales force.

Second part is the payout to third parties. And you know we had a target to go below 4% in terms of asset management. As you see, we have reached 3.8%. So again, almost 10% reduction. Thanks to the renegotiated -- continued renegotiation and the focus on fewer player with higher assets.

So next page, you can go through the operating costs. We changed slightly the representation. On the left of the slide, you see overall cost reached EUR 155.7 million. We highlighted 2 new -- 2 contributions, one coming from the one-off items, mainly, as we already said, BG SAXO and Valeur. And on the other side, Nextam because we start including Nextam for 2 months, September and -- sorry, August and September.

Focusing on the core operating costs. The overall increase is at 5.8%, and again, mostly linked to the acceleration in key strategic projects. And we are in process focused on quality people, quality manager to accelerate -- even accelerate our realization of the new projects. Overall, for this year, we confirm, I think that this is the most important message on the cost side, we confirm our guidance of core costs in the range of 3%, 5%.

Slide 13, focus on efficiency, our operating leverage or the ratios are at the lowest level. Operating costs out of total assets reached 0.31%. Cost income ratio, both reported and adjusted, down to 39% and 32.9%, respectively.

Last part of the first chapter, Page 14, capital position, CET 1 and total capital ratio, well above the reg requirement, respectively, 16.5% and 17.8%, slightly lower to the same period in the last year driven by the full application of IFRS 16 and the first time consolidation of Nextam. Of course, these numbers consider also the new dividend payout policy we communicated during our Investor Day, that I confirm will be also for this year in the range of 70%, 80% of the net profit.

So before moving on to the next session. Just to sum up this first part, we see solid growth in almost all the revenue streams and a very efficient operating leverage. Everything is working very well, and we are confident to see further improvements for the fourth quarter.

From Page 16, we start with assets, inflows and recruitment. So total assets, as we have just seen, up to EUR 66.1 billion. Net inflows of EUR 3.8 billion. The contribution of the performance of the client portfolios is pretty impressive, EUR 3.7 billion, of which -- that implies a yield performance for the client and the total assets of 6.4%. And we thought if we focus only on the asset management products, it is 7.5%. So more than offsetting the negative performance over the last year.

Slide 17, you can see the breakdown of total assets. And again, here, the most important thing is to see how we continue to diversify all the main contributors of total assets increased in this -- in the first 9 months. Managed solution, up EUR 4.1 billion. Traditional life policies, up EUR 1 billion. Banking products, up EUR 3.5 billion. On the right of the page, you see that also breaking down the managed solutions, all the contributors increased. Insurance wrappers and financial wrappers exceeded the EUR 15.5 billion, while total funds exceeded EUR 15.9 billion, with a raising contribution of the in-house product. Banking assets, well balanced, EUR 9.1 billion, deposits; and EUR 9.2 billion current account. And of course, in case of a stabilization of the yield, we could see some extra revenues from this kind of investment.

Page 18, there is a focus on our Luxembourg platform. We achieved EUR 16 billion, highest level ever, 2 positive contributions. The first one the institutional fund classes continue to increase EUR 4 billion in 4 years, EUR 9.3 billion, and very positive. You can see the acceleration in the retail fund classes. As we said last year, the focus now is also on the retail distribution. And just 9 months, we exceeded the highest level reached in 2015. So we closed the first 9 months with EUR 6.7 billion.

On the right of the slide, you see the assets under advisory. Again, impressive results, EUR 4.4 billion, with positive contribution of all the different approaches. So securitization, family office and pure financial.

Page 19, let's move on to net inflows for the first 9 months, EUR 3.8 billion, slightly lower than the total inflows with the last year, EUR 4.1 billion. But again, in the last 3 months, including October, inflows are, for each month, higher than the same month for the last year. So August higher, September higher and October higher, with a projection of the net inflows for October above EUR 300 million.

In terms of asset expansion of asset under advisory. You see the numbers of contract. In the first 9 months 2019, more than 6,600 new contracts that if you compare in relative terms with the last year, the increase is above 50%, with an average asset per contract, almost in line with the last year between EUR 500,000 and EUR 600,000, in particular, in these first 9 months, the average was at EUR 650,000.

The last page, a focus on recruitment trend. September, 59 new colleagues; in October, we had another 10 new colleagues. It's really important, as you know, to be very cautious in this activity during the phasing of MiFID review. We start seeing normalization. So as we already announced, next year, we start again, recruiting in line with our historical average.

On the right, you see total net inflows by acquisition channel, and in particular, the impressive number of the contribution of existing network at 74%.

So just to sum up, I think that numbers are very good. Assets quality impressive, well balanced where the cost needs to be well diversified in terms of assets, in terms of investment solution, in terms of products, in terms of the inflows. And we achieved, I think the highest level of diversification. This is, I think, it is a thing that guarantee the sustainability of our results.

Now the last section is about business update. First of all, we increased the target for this year in terms of total net inflows coming from the ordinary business from EUR 3.7 billion, EUR 4.3 billion. It was the range of the target announced during the Investor Day, up to EUR 4.55 billion. A potential -- an explanation of this acceleration of inflows, in particular, of the existing sales force, in my opinion, comes from the introduction of a new organization in the network last year. Now it's up and running. So there is more focus for different targets of financial advisers, and this is really important. And the second is about brand awareness and brand recognition. In the last publication of Magstat, where you have the ranking of the private banking companies in Italy. We reached, for the first time the podium at the third place. So this means positive noise of the reputation. And particularly, if you compare this positioning, with this ranking with the rank in 2015, as we were 8; and in 2013, we're 15. So it's impressive how fast has been the acceleration of the assets of private clients, and we continue to see these positive trends. And one explanation, one important explanation as we had a dedicated division, the wealth managers.

Page 2-3, 23, you see that these impressive growth come from all the classes of our clients from affluent, upper affluent private and ultra-network individuals. Of course, the contribution terms of assets is more relevant for private clients and ultra-network individuals in terms of new clients is more distributed. And this is thanks to more and more focus on differentiating the product offerings for our clients. On one hand, we have very, very high personalization, private insurance and related products. On the other one, very innovative saving products. So we continue to be focused on all our customer base, and we see mounting opportunities, in particular, in the segment of affluent clients.

In the last 2 pages, no, next last 3 pages, you see a focus on the -- our main initiatives. The first is about Lux IM. I would say, mission accomplished. We were very focused on launching a new sustainable offering in Luxembourg, with the aim of provide -- the aim at providing a well-diversified solution also for retail investors and direct investments. And if you look at Page 24 on the right, you see the impressive acceleration in retail fund classes from EUR 1 billion at the end of the first half of the last year, up to EUR 3 billion. So we tripled the assets in 15 months. And we are very, very focused and optimistic on the future. For example, in October, again, we exceeded EUR 150 million of net inflows for -- in the Lux IM retail distribution.

Page 25, other 3 main initiatives. The first is about certificate and structured product. We exceeded the targets set for 2021 in terms of notional new issues, EUR 317 million compared with a target of EUR 300 million. And we are very close to over achieve also the target in terms of the new revenues. And this is thanks to the partnership with BNP Paribas, the extension of the offering and a very, very high focus of top managers in the bank.

The second project is about robo-4-advisory. Also in this case, we had well above linear projection to achieve the target of 2021. In particular, in the first 9 months, we are close to EUR 12 million. And again, just linearly projecting these numbers for the fourth quarter, you would see that we will exceed EUR 60 million. Volumes continue to grow. So we are very confident to reach well in advance the target of 2021.

Last but not least, we start seeing also positive effect of BG SAXO. Even if we are just in the beginning of the story, you know, we launched the new platform between June and July. We start by piloting this platform and we're starting extending a platform to new clients. We are very, very close to launch new initiatives, a simplified rational of the trading platform and the possibility for our financial advisers to insert on behalf of our clients of the orders. So the so-called B2B2C platform. And if you look at numbers in the first 9 months, we almost achieved the total brokerage fee for the retail over the last year. So again, also in this, I can say starting positive results.

If you sum up these 3 new revenue streams. First 9 months of the year, EUR 32 million. And again, just a linear projection show you how far we are and the quality, and we beat the expectation, the linear projection to reach the target EUR 50 million, EUR 60 million before 2021.

So we can say that if we go to Page 26 in considering the 3 main ambitions, we announced during our Investor Day empowering FAs, We are well on track. All the initiatives are up and running. There is room to accelerate in all the initiatives, retail distribution of in-house products, structured products, advisory fee and brokerage fee, with a solid core business in the wrapper solutions as well as more in general, in asset expansion.

And the second ambition was about the clients' first choice. So in terms of digital footprint in the game, here, we are just at the beginning. In the last 6 months, we launched the new mobile app, we started opening up the new BG SAXO platform. We are very focused on marketing, direct marketing also now from clients. So I see also on this ambition, positive upside.

And the last but not least, we have just signed the closing of Valeur, confirming our international expansion. Valeur is going ahead of expectation in terms of assets, and we will focus on our priorities in Switzerland in the next conference call. We are not in a hurry, we want to be very focused on reputation areas and providing the best solution for the professional to gain momentum for a Swiss client as well as Italian clients willing to diversify the booking center.

So considering the acceleration of all initiatives, I can say that all the management team is very committed and confident to overachieve the targets set for the end of 2021 in terms of inflows, total assets, and at the end of the day, net profit.

Thank you. And now I will hand over to Q&A.

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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 - Equity Analyst [2]

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I have 3 questions. The first one is on the NII. You gave us a gut feeling about the full year results in terms of net interest margin, I guess, we are speaking about something in the region of EUR 73 million, EUR 74 million. I was wondering if you can provide an indication for 2020, 2021. So which kind of growth rate, if any, should we attach on top of year-end '19? Also linked to this, I think you mentioned during the speech that there are many reasons behind these very robust NII in Q3. You mentioned reinvestment. But looking at Page 29, I think you even managed to reduce the duration of your bonds in the 9 months of 2019. So you're remaining fairly short, 1.6 years duration, and you managed to have a 0.83 percentage points of yield on financial assets. So I was wondering where did you invest in the 9 months and in Q3? Because, I guess, Italian govies probably are not there.

Second question is on the performance in October, if you can give us a sense of performance fees, given that the month is ending today? And also flows, apart from the EUR 150 million you mentioned for the Lux IM. Overall, which kind of flows you achieved in October?

The third question is on your strategy in illiquid. I mean, without entering too much into some of your competitors speaking a lot about illiquids. I was wondering if you are remaining on the current strategy with certificate, with some securitization or you're planning to go more into this kind of products?

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

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Thank you, Gian Luca. Starting from net interest income, I can say that we still expect in a 1-digit growth for the full year over the last -- over next year. In terms of performance in October, very poor, few million. Total inflows for October above EUR 300 million with a total contribution of asset management product above the average of the year.

In terms of illiquid, I confirm our very conservative approach. Now we start with securitization and with private debt initiatives for professional. Probably in the first half of next year, we will enter distribution of -- also for Italy clients. But for us, retail clients means upper affluent and private, launching dedicated vehicles, where the key drivers is diversification and the coupon. So nothing disruptive. It's a way to continue to go in the direction of increased diversification for our clients and start introducing illiquid assets also for upper affluent and private clients, not necessary professional.

For the quality of their investment in the banking book. I hand over to Tommaso.

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Tommaso Di Russo, Banca Generali S.p.A. - Head of Strategy, CFO & Manager of Financial Reports [4]

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Thank you, Gian Maria. Let me say that we are trying to manage -- we are managing the net interest margin because thanks to the risking that we applied last year to the banking portfolio. We were investing a very short duration and maturity bonds. So we had a lot of bonds, which were expiring by the end of the current year and the next year, which has yield, which is near to 0. We are investing on a higher rate because of that. So we are still diversifying the portfolio, as we said in our Investor Day, so looking also at other European government bonds. And especially, you see that in our banking books, there are a part of the short banking investments, which is invested in also other European not Italian short government bonds like Spanish and Portugal. So it is something which is in our strategy.

Overall, as you have seen, the maturity and the duration of the banking book is still pretty sure. So we are still very conservative. But the main driver for the growth of our net interest margin is basically linked to the expansion of the asset that you can see looking at our balance sheet. So a part of the net inflows, which has been collecting the last year has been also collecting deposits. So we are -- we have higher volumes in the asset side.

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Gian Maria Mossa, Banca Generali S.p.A. - GM, CEO & Director [5]

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And in part of the story is a better management of cash and communication as well.

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Tommaso Di Russo, Banca Generali S.p.A. - Head of Strategy, CFO & Manager of Financial Reports [6]

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Yes.

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Gian Maria Mossa, Banca Generali S.p.A. - GM, CEO & Director [7]

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So the cost of cash is declining over time.

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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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A few questions from my side as well. The first one is on the assets under custody, assets under advisory, sorry, that you have been able to continue to increase, and this remains quite impressive move to me. We discussed the last call about profitability in the region of 46 basis points. Is that something that you can confirm? And how we can expect this margin to evolve, meaning if there is one of the 3 classes that grows more than the other, can it change? Or it's kind of, let's say, balanced, so we can expect this 46% to remain pretty stable in the future?

The second one is on the factor you mentioned before. So the recruitment, you think to increase next year. Can you give us some color about maybe what kind of professionals, we are looking for from competition from banks, from -- so any comment on that would be helpful. And in conjunction to it, you perform these 2 acquisitions, one in Italy and one in Switzerland, which obviously seems to work pretty well. Have you any, let's say, hope or expectations to have other opportunities in the coming months or 2 to find other acquisitions of this kind? And if you are still focused mostly on Italy and Switzerland or you're looking to do something else?

And finally, this year is a good year for performance of assets and so you're benefiting in the net profit and expectations are pointing to EUR 200 million that if we consider the payout ratio, you gave 70%, 80%. You could easily exceed the floor of EUR 1.25. So can we expect if the EPS will be higher in this range to have a higher dividend than the floor, you have set at EUR 1.25 per share?

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

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Thank you, Alberto. So in terms of profitability of assets under advisory, during our Investor Day, we announced a range of EUR 40 million, EUR 45 million. Now we are a little bit above. We're confirming this morning EUR 46 million, but we said it in our projections are in the average of the range of EUR 40 million, EUR 45 million. And we continue to see strong inflows also October and being in line with the previous months.

In terms of recruitment, let's say that it's a well-balanced activity among financial advisory networks, commercial banks and private banks. I'm pretty confident to a little bit accelerating this -- in the last part of this year, staying around above EUR 80 million and for next year, around EUR 100 million. This is the range that we have in mind. With greater and increasing interest, in particular, for the advisory, the assets under advisory for the advisory services, there is a greater attention on our holistic approach also to maintain good revenues, and let's say, good payout, introducing new services, new ancillary services to the clients because you know perform -- to perform next year will be probably more complicated than performing this year. So you have to increase the quality of our ancillary services for your clients. So in this sense, we are considered the best in the market. We are first-in-class for the platform from our financial advisers, where we can provide risk assessment for the whole of wealth, and we have several partnerships to create the value also on other sort of wealths on this instance, for entrepreneurs and real estate and so forth.

So in terms of acquisition, we are pretty confident with organic growth. So we are starting, of course, the market and if we see opportunity, we are ready, but in this moment, we don't have any this year on the table. And we are very focused on considering expansion in Switzerland, and we are focused on self-financing any other acquisition. And this leads me to the DPS. We are confident to provide DPS higher than EUR 1.25. So to say, we'll exceed the floor, but we'll maintain, let's say, as a guidance, the range, 70% to 80%.

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Operator [11]

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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 [12]

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Yes, I have 2 questions. The first one is about the split of the EUR 1.1 billion of assets belonging to Valeur. I was wondering if you can provide us with the split between nonmanaged and managed assets? And then second question is about the possibility of a new voluntary disclosure, which was -- which appeared in the press in the past weeks about the draft budget law. I was wondering what are your thoughts about it and if you think that there could be a huge amount of money still to be repatriated?

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Gian Maria Mossa, Banca Generali S.p.A. - GM, CEO & Director [13]

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Thank you, Elena. Starting from Valeur, consider -- you have to consider Valeur is a sort of external asset manager. So either in investment solution or in advisory services, all the assets are under a recurring fee. So it's 100% under recurring fees either for the investment solution or for the advisory services.

In terms of, let's call, voluntary disclosure. Now we, of course, we heard about it. And if you look at the previous edition, it wasn't really a success. And so also in this time, we do not expect higher inflows. Even if I think that if it is the case, we are better positioned than others because now compared to the past, we have the both distributions, Switzerland and Italy. So in case of success, we'll be probably the first to take advantage. In this moment, the details are not known. So prudentially, we project, we do not project an extra contribution from this initiative.

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Elena Perini, Banca IMI SpA, Research Division - Research Analyst [14]

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Okay. Just a follow-up on your first answer because my line was disturbed. Have I understood correctly that the 100% of Valeur assets are nonmanaged because they are advisory assets?

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

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No, no, no, no. Sorry. It means that part are managed with investment solution and part are under advisory. So our 100% of the total assets are paying a recurring fees.

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Elena Perini, Banca IMI SpA, Research Division - Research Analyst [16]

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Okay.

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Gian Maria Mossa, Banca Generali S.p.A. - GM, CEO & Director [17]

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We should be around 50-50.

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Operator [18]

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The next question is from Anna Adamo with Autonomous Research.

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Anna Adamo, Autonomous Research LLP - Partner of Italian Banks & Asset Managers [19]

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My first question is to gather your high-level thoughts on the current interest rate environment. If I look at the share of deposits in the financial portfolio of Italian families, this has basically reached almost 30%. And what's your view on the possibility to introduce negative interest rates on client deposits above a certain threshold in order to offset the interest rate headwinds? And my second question is on ESG. Can you talk a little bit more about Banca Generali approach towards ESG and how this is incorporated in your investment process? And lastly, can you share with us your latest feedback from clients following the publications of other MiFID reports?

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

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Thank you, Anna. So starting from the stability to implement negative yields on the current account in the moment is out of scope. We are thinking of several initiatives to offer alternatives. Thanks to structured product and, let's say, some very well diversified solution in the illiquidity space with a maturity of 3 years. I don't think that there is a real opportunity to apply a negative yield, if not applied by all the, let's say, all the banking system.

In terms of ESG, we are the first mover on this field. We launched a new commercial approach, where, first of all, you can quantify the real impact in terms of sustainability of the funds. And second, we translate all the single investment solution in the 17th SDG goals, and we provide a digital platform to clients where they can personalize with their personal preferences in terms how the 17 SDG goals so that you optimize the total investments, both in terms of risk reward as well as the personal preference versus the SDG goals. So if you look at the inflows in ESG solutions, since the launch of this new digital platform that was in March of this year, we are very, very impressive. If you think of the new inflows, our ESG solution exceeded EUR 600 million in 6 months, basically. So it's great part of the inflows in asset measure products for this year in the same period. So we are very confident to have also this sort of distinctive approach to offer alternative solutions to clients.

In terms of MiFID, if I look at complainings or litigation for cost reporting, negligible, it's 2 or 3. It means that our financial advisers did a very good job in communicating and in anticipating the reporting to clients. I'm not sure that the whole industry is exactly in the same good shape because, as you know, our great part of the statements were sent during the summer, and most of them sent through, let's say, the mobile app. So to see the full effect, in particular, in a traditional banking system, we are -- probably we need to wait a few -- other few quarters. So in the next 3, 6 months, we will see the full impact also because I think that the next time the statement should be sent before -- during March. So in -- let's see, I'm very confident that if there is an impact for us will be positive because while we approach the topic well in advance, and we trained all our financial advisers. I don't have the same impression for the market in general terms.

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Operator [21]

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Our next question is from Filippo Prini with Kepler.

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Filippo Prini, Kepler Cheuvreux, Research Division - Equity Research Analyst [22]

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Two questions. The first one, does your guidance on -- of a single-digit growth in NII for 2020 includes also the small positive debt from tiering? And if so, could you confirm that it should be something in the region of EUR 2 million? The second, on the performance fee, you indicated low limited performance fee for October. But is it fair to assume for the next 2 months of the year, higher contribution because most of the new Lux IM app that you have launched that still pending listing or it's a wrong point?

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

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Thank you, Filippo. You are right. The tiering contributes for EUR 2 million, EUR 3 million next year and are included in our projection. In terms of performance fee, again, you are right, almost 80% of our assets are close or at the high watermark level. So of course, in case of further increase of the markets will be very, very positively impacted, both in November, December as well as the beginning of next year.

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Operator [24]

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(Operator Instructions) Mr. Mossa, 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. Thank you all for the participation, and good bye.

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Operator [26]

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Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.