Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Banca Generali's 2021 Interim Results Conference Call. As a reminder, all participants are in a listen only mode. After the presentation, there will be an opportunity to ask questions.
At this time, I would like to turn the conference over to Mr. Gian Maria Mosta, CEO and General Manager of Banca Generalis. Please go ahead.
Good afternoon and welcome to our first half conference call results. Let me start by saying that the 1st 6 months This year were the best ever in terms of commercial results and financials. And Starting from the commercial results, both total assets and total inflows exceeded the target that we set for our 3 year business plan. In particular, total assets exceeded €80,000,000,000 With a growing penetration of assets under advisory, €6,800,000 and assets under management, above €41,000,000,000 And this is thanks to the fact that the financial advisory network is really in good shape And it continues to grow steadily, both in terms of size and portfolio average. And you know that For us, portfolio average is a key indicator of the sustainability of our numbers.
In terms of financial results, We decided to post a prudent provision of €80,000,000 to protect our clients And I will give you more details in the next slide. Despite this one off, the net profit close above €100,000,000 that It is the best half ever for the bank and focusing on the Q2 of this year, the reported net profit were at €44,700,000 with the recurring component at €46,000,000 that again is the best ever quarter for the bank in terms of recurring components. And this is thanks basically to the business expansion and very efficient operating leverage. Finally, the capital position is very solid, even after incorporating €500,000,000 for dividends. And I'm sure you agree that the recent decision by the ECB not withstand the recommendation is very, very welcome.
So now let's move on to Slide 4, where you can find the details of the one off provision. The need 1st of all, the need for this provision comes from potential losses In the portfolios of our clients, that could result from the specific investment In securitization in the healthcare receivable, specifically, Banca Generale will launch in the next weeks A purchase offer to buy all the senior notes of this securitization, which as of today have an outstanding amount of €478,000,000 Note please that the purchase offer Doesn't include the other tranches, mainly junior notes of the securitizations amounting to €64,000,000 And that these junior notes are not held either by our clients or by the bank. So we are talking about senior notes Only. The amount paid to our clients will be no lower than the initial investments of our client, Less the repayments already made and the coupon already distributed. Moving on, on the assumption for these provisions and our very prudent assumption, We have conservatively allocated the sum of €80,000,000 that is estimated as a difference Between the fair value that we have worked out with the support of especially, external specialists, So the fair value of the senior notes and the price offered to clients and assuming that 100% of our clients will This offer, why we decided to Launch lease purchase offer for basically two main reasons, two specific reasons.
The first one is because there are some critical issues, sorry, emerged in the procedure for the recovery Of these healthcare receivables also related to the long pandemic situation. As you probably know, The so called SAVE Italy decrease limited the ability to start or continue an enforced execution against Local Healthcare Units and limited also the possibility of negotiating the recovery of these receivables according to the planned timetables, including the possible settlement. The second reason is because we carried out an analysis Over the underlying of these portfolios of healthcare receivables with, as I already said, the support of external specialists, which identified that the quality and the fair value of these receivables were lower than the one This analysis is was run-in consideration of our Diligent's duties toward our clients, of course, to better assess the impact of the pandemic and also followed a servicer's Notice highlighting a breach in investment guidelines of one of these securitization. For these two reasons, although we acted only as a placement agent And consider that the notes were proposed only to professional clients, we decide to undertake this commitment to fully protect our clients And strengthen our trust based relationship with them.
Clearly, And be sure that we are also carrying out an analysis to understand whether there has been any proper behavior By those who manage this securitization and thereafter we will assess whether and to what extent To take any measure in respect of this. The purchase of these senior notes We'll have negligible impact on the risk weighted assets and on the capital ratio of the bank. And the impact will be limited also on the return of the banking book and it will be in the range of €2,000,000,000 3,000,000 for this year. And this negative impact, small negative impact on the net interest income We'll be of course more than balanced by trading gains from selling financial and corporate bonds to mitigate the risk weighted asset. Last, in order to manage the purchased notes, we have appointed a specialized asset manager Among the best in the market with very strong competencies in this field, the expected return Is in the range of 2%, 4% and considered that from accounting point of view, the notes will be posted at fair value And the return of these notes can be recognized in the financial statements under trading gains only after the repayment of the capital invested.
So not pro rata temporis. So basically, we decided to do a very prudent provision For a specific event that for two main reasons implied a potential reputational risk with our client. And for this reason, we decide to launch this purchase offer. And from my point of view, This is the best way to manage this situation and I do not see any further impact and spillover on the clients and on the numbers of the bank. Slide 5 is our user Representation of a simplified P and L and for the sake of time, I will not comment it.
While I would like To comment page Slide 6, where we can see the breakdown of our net profit. So first of all, as you can see, the acceleration of the recurring components in the first half of this year is very solid, €83,200,000 means 23% higher on year on year basis. And this is a confirmation of the commitment of the bank that we decided during our Investor Day 2018 to focus on sustainable growth of the core components of our P and L. If you look at the graph on the right of Page 6, you can see the annual results. And you know that in less than 4 years, We doubled our recurring profits and we are positive for the full year results for this year and beyond.
So I do really expect A very good year, summing up first half and second half results. The business is really, really solid. Next page and in the next two pages, so slide 7 and slide 8, we focus on the buildup of both nonrecurring and recurring profits. So let's start from Slide 7, where there is this focus on non recurring items. Just to sum up, I would say 2 positives and one negative.
On the positive side, we have of course The one off record of performance fees driven by of course favorable market condition Plus, a second positive comes from a positive tax contribution of €13,000,000 Basically linked to the realignment of the goodwill and other intangible assets in accordance with the 2021 budget law. On the negative side, you can see the one off Prudent provision that we already introduced that is not IMAX protecting our clients. The combined results of positives and negative is an increase of more Then EUR 40,000,000 year on year. So I do consider the provision a one off And is more than offset and one off of the performance for the first half All this year were really, really impressive. Page Slide 8, you can see The breakdown of the recurring profits were in the operating items, The quality of the operating leverage is pretty clear with net fees up by €34,200,000 and cost up only by €5,000,000 On the right, you see the non operating items and the impact of this non operating is around €40,000,000 mainly for higher provision linked to the FA loyalty plan.
And you know that the loyalty plan is driven by the commercial result. So now From page 10, we start with our usual representation of our P and L line by line. We start with the net financial income. Net financial income in the first half closed at 55.3 We have a higher contribution of the trading income in the 2nd quarter was at €8,400,000 The net interest income yield is lower than in the first quarter, Basically for the increasing liquidity in the portfolio, you can see on the right of the page where You have the trend over the total assets and the trend over the interest bearing assets with an increase from €14,000,000,000 to €15,700,000,000 €1,000,000,000 and the negative impact on loans to banks with a yield of minus 0.22. Moving on Page 11, this is the greatest result in my opinion.
So gross recurring fees up by 18% with positive contribution of both Management fees and other fees. And in terms of margins, let's say there are some Around the fact, but you said that it's pretty stable in the quarter and then on the right you have available fees. Moving on Page 12, we have the quarterly trend of management fees. On year on year basis, the half result is pretty significant, plus 17%, But also the quarterly trend is very solid with the Q2 of this year at €193,100,000 This implies considering the managed assets A margin of 1.38. And just to remind that this 1.38 included also Nexstar and Volaris.
And we confirm the target 1.38, 1.42 for the full year and consider these numbers Don't include the new pricing structure for the vaccine, we will see later. Page 13, where is the focus on gross fees. Numbers are It's pretty solid also in this case. You see that the margins is stable at 0.18 We have a growing contribution on year on year term of both banking fees and fees. On the right, you can see the breakdown between new revenue streams that continue to grow Up to double digit, at a double digit rate and this is basically driven by all the components on the new revenue engine.
But it's also impressive the acceleration in the more traditional fees. Part of this increase Is linked to the market, think of for example the phone fees, but is the consequence Of price optimization in the current accounts of our clients. Next page, Page 14, there is the focus on fee expenses. Also here positive numbers. Total payout ratio closed at 52.7 percent, so a further reduction on year on year basis.
This is basically driven by a lower cost of growth And this is basically, like I said, the overall amortization costs are the same, but the assets are increasing. So in relative terms, It accounts less and less. While payout for third parties is stable. And as we already mentioned here the target is to stay close or below to 6%. Page 15, there is the focus on operating costs, overall plus 2.7 Percent were on the right, you see the focus on the core operating cost, up 4.6.
This is basically driven by increasing the potential cost of the variable components Of the salaries for the good results of the bank, there is a linear increase in amortization as expected And some acceleration in investments due to the fact that the results are very solid. Page 1 sits, operating costs, the ratios. Here the numbers are very impressive and are of course linked to an exceptional half, First off, the operating cost on total assets is lower than 0.3. It was a sort of threshold And cost income continues to go down both in terms of reported cost income as well as adjusted cost Page 17, capital ratios. We have already allocated €1.25 per share for this year.
And if you Sum is €1,250,000,000 to the previous €3,300,000,000 We have exceeded 5 €100,000,000 of dividend and we are ready to pay the greatest part as soon as October. So we confirm the intention to pay €2,700,000 in October and €0,600,000 In January and of course, the part of dividend for this year and I'm sure it won't be on the floor of 1.25 After the formal approval of AGM, in terms of leverage ratio and liquidity ratio, I said that we continue to be well above all the limits required by regulators. So just to sum up, I think that the numbers are the result Of a very sound performance of the commercial of the financial advisory network. It's a very positive momentum for the industry. It's impressive momentum, positive momentum for us.
The brand matters. Our proposition in private banking is working very well. So I'm very confident that in particular core recurring net profit We'll increase even further in the second half of the year also because also July started very well. Moving on, on the net inflows, assets and recruiting. So Page 19, We already said we exceeded €80,400,000,000 of total assets.
What matter most is the percentage of managed solutions on total assets. We are at 51.3 percent, thanks to the contribution of all product initiatives In our span, 3rd party funds, financial wrappers and insurance wrappers. And as you can see, The stock of traditional life policies is decreasing over time as we announced Already announced during the previous conference call. We are going to use this product just practically in case of Volatility in the market and in case of opportunity to accelerate inflows. Page 2021, breakdown of total net inflows.
Slide 20 is about The quality and you see that the acceleration on year on year basis is basically driven by The acceleration in managed solution almost doubled on year on year basis. Page 21, There is the contribution in terms of acquisition channel. You know we started we resumed the recruitment activity, Pretty sound is working very well, 75 new colleagues in the first half. Despite this refocus on recruitment, The activity of the existing sales force is even stronger than in the past. You can see it On the left graph of the Page 21, where the contribution of the existing network is at 2 point €8,000,000,000 or €600,000,000 higher than the past year.
Page 22, The constant growth of our financial advisory network in terms of numbers, so now we have 2,139 colleagues, new colleagues, pretty impressive the breakdown on the right in terms of clusters Where the work managers, so financial advisers with more than €50,000,000 exceeded the 340 units with a portfolio average above €90,000,000 On the bottom of this page, you see, you remember we launched The project, the team project during our Investor Day, this is a sort of recap of the numbers Achieved as of today 114 Financial Advisory teams It's almost 10% of total assets and the portfolio average per team is about €80,000,000 This is just to remind you that the kind of team are both vertical teams, so Senior with junior and horizontal teams with complementarity of capabilities. Page 23, just to focus on the constant growth of the portfolio average where the gap Compared to the portfolio average of the market is continuing to grow. So here we can only say The model is working very, very well, very solid and also the recruitment activity It's going very well. So for this reason, we decided to increase the target The last few slides are on our Luxembourg platform.
We deliver on promises. The new offer is live and here you have some Numbers and the, say, the main drivers of this new offer. Page 25, you see the evolution of assets. We €20,000,000,000 On the right, you see concentration that were well spread across Different strategies and different asset managers to cover 80% of the assets, You need 40% of the strategies. So it's definitely less concentrated than the traditional Gini Benchmark and this is true also in terms of external asset managers.
To achieve 80% of assets, you need 40% of the external asset managers. Page 26, just to say that we are performing also very well in terms of absolute performance for our clients. And Page 27, just to say that the numbers on the retail distribution of these Products is gaining momentum, is working pretty well. We are close to achieve €10,000,000,000 But on the right, you can see that it's working very well without any specific Initiative to push. In terms of the ratio, total retail Products in total in house retail products and total assets we are constant at 12% of total assets And on the graph on the right bottom of the page, you see the mix in the retail funds offer where 3rd party funds account for 56%.
So also here there is some room to be more And more efficient. So Page 2829 is a recap Of the new features and new performance fee mechanics of our platform in Luxembourg, On Page 28, you see that we are strengthening our equity offer and our thematic offer. We are strengthening the ESG proposition not only in equity but also in bonds, And we introduced for the first time 2 new families of products, What we call trackers of flagship premium asset management funds. This is of course the goal is pretty clear to internalize some of the assets distributed directly To our clients. And second, some cash parking initiatives where the goal is To close 0, to a 0 performance, but just 0 plus, 0 plus and because there is a growing request also for this Page 29, there is a sum up of the 2 new performance Fees calculation mechanism, starting from the looksim, the only change in the looksim is about the reference It is no more on year on year basis, but it is from inception, but we maintain the daily crystallization.
And for the BG selection, we introduced a high on high mechanism. So at the end of the year, we work out the performance. The reference period is 5 years. And in this case, the crystallization is on yearly basis. So we differentiate the approach also to have Some diversification inside our Luxembourg platform.
As I mentioned in the previous conference call, The new mechanism will be applied as soon as new products are launched. And for the existing products, we will introduce the new mechanism starting from January 1st And with the reset of the historical series, so for the 1st year, the impact will be 0. And with this introduction The new performance fee mechanism, I confirm we have also optimized the price of in terms of ongoing charge All the specific initiatives to offset €20,000,000 €30,000,000 of potential reduction in the medium long term on the performance fee. Page 30, which is just a recap of the target of our 3 year business plan. You know that we have been working for the new Business plan for the last month where, of course, the key drivers will be the same Asset growth, sustainable profitability and shareholders remuneration, and I do see an opportunity To distribute a very impressive amount of cash.
As I already said, we already allocated €500,000,000 and I'm sure that there is room to increase even further this cash due to the results and the expectation for the second half of the year. So thank you. And now I will And over for the Q and A session.
Excuse me, this is the COSCO conference operator. We will now begin the question and answer session. The first question is from Domenico Santoro of for HSBC. Please go ahead.
Hello. Hi. Good afternoon. Thanks for the presentation, the call and all the details. Just to reflect a little bit on this extraordinary provision on the senior notes of the securitization.
So it's my understanding is, Cor, and maybe 10 or so on the business. First of all, on this securitization, my understanding is that you will repurchase The notes that are held by clients at the moment. So clients that want basically taken losses, I'm not sure whether you're going to recognize then the time value, of course, the investments or the money. And you will Chase, the notes, can you tell us what is the residual value of these notes based on the appraisal that you have just done? In order to understand whether there is any risk at this point on your balance sheet rather than the clients, I understand you mentioned during the call there was a violation of selling policies Now you don't expect any headwinds on your business, Any reputational issues, probably we'll touch already based on this a couple of calls ago when there was the famous article on the ST.
But the offer is going
to start in September and probably you don't know yet how the clients that will React to this, can you tell us if you have any numbers on hand, how much is the money Invested the total amount in terms of AUM from of the clients that are going to be involved in this And then there is more question on the business instead. The re pricing Qing, on the assets under management, if I remember correctly, it was EUR 25,000,000, EUR 30,000,000 So the run rate in terms of additional fees, given that I started already in July, if I'm not wrong, I just wonder how much we should Including the Q3, a quarter of this €25,000,000,000 or more a portion, just some guidance would be helpful. Thank you.
Thank you, Domenico. I will start from the second question and then the first. The reticing It started at the 20th July. So it will account for 2 months in the Q3 and the full quarter for the last one. In terms of headwinds with clients, I'm sure I won't see I don't see any risk, but probably some strengthening in the relationship Because we have some example in the past that when the bank decide To say to hedge any potential losses, the reaction of clients And specifically on the financial advisers is very positive and strong.
And consider that we already Approach top managers to understand fully understand The potential reactions and again, I'm positive that probably it's not about headwinds, but it's about tailwinds Because we are acting to protect our clients. And so the numbers of the clients are Important clients for the bank is about between €4,000,000,000 €5,000,000,000 of assets of our clients. And I'm sure being professional clients and being clients of our top financial advisor, They know that we are doing something exceptional. It's the first time ever for the bank and is linked to the fact That in the investment guidance, we saw the quality and fair value of the underlying Different from what we expected. So it's not about me saying all financial advisers, but this is driven by, In my opinion, different underlying compared to the one we should have invested, the clients should have invested.
For the details in numbers, I will hand over to Tomas.
Thank you, Gianmaria. Yes, I think that To the question of Domenico, we have to say that we are going to buy the notes from clients at a price which will be Enough because we don't want that clients have occurring any losses. So it will be something near to Nominal, a little bit lower, but because we have already repaid the clients for part of the principle and also they Have gained the yield during the last 2 or 3 years. So at the same time, we did a very deep due diligence On the underlying, with also one of dedicated specific player, which is very expert in In terms of healthcare receivable, the diligence was very analytical. It follow a bottom up approach, Cover almost the single invoices which are underlying the notes, which are more than 30,000.
And so verifying the history and every single invoice, So we think that our fair value is very solid, the devaluation that we did. So that's why we think that The provision that we put in the P and L is very conservative. We don't expect To have significant variation of this value over time. So it's really a one off and we think that
we have solved the Yes. Just to complete what Tomasso said, we asked to an external specialist a liquidation value And this declaration values confirm the quality of the fair price and they say that the prudent Provision we decided to make. And second, the external asset manager that we manage these portfolios and develop a business plan. And I'm more confident to recover part of this provision than to have a further loss. So I consider this provision a very prudent one.
So just to understand if
Please, please go ahead.
We cannot hear you.
Hello? Yes. Can you hear me now?
Yes. Yes.
Sorry, just a follow-up on this. The €80,000,000 includes both the Reimbursement, let's put this well, the record chase of the notes and also some provision that you might have already taken on these notes, Given that the fair value set, which you have done the due diligence,
can you just
mention how much we talk about in terms of receivable value, it is not?
Well, I mean, the provision is the difference between the price that we pay to the clients And the fair value that we estimated of the notes. So let's say that The fair value of the notes is around 80% of the senior notes of the Amount of the senior notes outstanding today, which are in absolute terms around EUR380,000,000 And this is the difference. And overall, the assets which are in the notes, So the amounts to almost 600, in fact, 600, in this. But of course, there is also the other tranches, Medtane and junior debt takes the first part of the loss.
Understand. Thank you very much.
The next question is from Gianluca Ferrari of Mediobanca, please go ahead.
Yes. Good afternoon, everyone. Chia Maria. Sorry to come back to this situation for I was wondering if this book is partially related to what the Financial Times mentioned at last year. So if we are talking about In part, the same kind of securitization.
And second, if the structure of those of that book is the same Of that related to the FDA article. Also because I understood you mentioned during the call that you might evaluate Some actions against who work to set up these books. Point number 2 is I see on Page 3 that you are Calculating capital ratios, assuming the allocation to dividends of 80% of first half profits. Given that this is going to be probably a record year for you, should we take the 80% Payout as a kind of guidance? And if so, will it be possible to make this dividend Sustainable in the future?
And the 3rd and final question is a clarification on the cost of growth that was a bit lower in absolute terms When the inflows into managed assets were €2,000,000,000 compared to €1,400,000,000 last year. So Advisors sold a lot of managed assets in this first half. So I was expecting also higher is to be paid or accrual for bonuses to be paid to advisers. So if you can Explain to me what is the math behind this slight decline in the cost of growth? Thank you.
Thank you, Gianluca. Let's say that the Financial Times article was about potential Anti money laundering issue related to 2 vehicles that had already reimbursed the client. Here is in terms the issue is on other securitization always linked to Healthcare receivables and it's about the fair value and the quality of the underlying. And we know that, for example, the servicer that is in charge of the control I strengthened the anti money laundering control. In terms of payout, Let's say that the guidance is always the same, the range 70%, 80%.
And as you know, we are very focused on removing the dividend in absolute terms And we introduced the 2 tranches to use performance fee also To be impactful also on the absolute dividend of the next year. And the mechanism will be almost the same. So We are not absorbing excess capital. We do want to remunerate our shareholders, But the decision to stay closer to 70% or 8% will be taken When we will be close to the AGM. On the payout ratio, this is really interesting because On one hand, of course, in percentage, the assets are growing very well.
So in terms of relatives, The incidence, the percentage, the weight is lower. On the other one, consider that year after year, We are raising the bar for our financial advisers. So we are increasing their targets. So if 5 years ago to achieve The bonus you had to collect €1,000,000 now the target is €2,000,000 So raising the bar and the targets of the financial advisor network provide a support in limiting and reducing the overall impact Of the cost of growth. So, say, the bank is growing, the targets are more and more challenged it must be the same for the financial advisers.
Very clear. Thank you.
The next question is from Elena Perini of Intesa Sanpaolo. Please go ahead.
Yes. Good I've got 3 questions actually. The first one is about your good cost So in the quarter, can we expect an increase in costs Lower than your initial guidance or what can be the delivers to keep costs under control in the coming quarters. The second question is about the Performance fees in July, if you can provide us with In approximate guidance or amount that you expect as only few days Gathering. And then the final question is about your Check one ratio at the end of June.
As you mentioned that there was the The seasonality effect that we know about the purchase of treasury shares to serve the remuneration policies, but There were also some higher capital absorption linked to temporary higher DTA for the one off provision that you made. So I was wondering if you can give us an outlook for this final part of the year. Thank you very much.
Thank you. On the cost side, The range in the core costs, 3%, 5% It's a good guidance. And we will be closer to 5 when numbers are strong, and we will be closer to 3 when the numbers will be less stronger. So I wanted to we want to accelerate the innovation. And so I will I feel to confirm the range of 3.5 We'll be closer to 5 if numbers continue to be very solid.
It's an acceleration of all the projects, and I think it's I do believe that it's really important to continue to invest. Performance fees in July, we are close to EUR 10,000,000. Consider that the performance fee for the 2nd part of the year won't be linear Because we apply a sort of cap of 2% on single solutions. So If the performance fee related to single fund exceed 2%, we stop it. Just To be clear that I do not expect to have the same performance of the first half.
And as a prudent approach, We set no more than EUR 10,000,000, EUR 16,000,000 for the full year. For the CET1 ratio, I will hand over to Thank you.
Hi. Well, yes, there are 2 main effects on the seasonality. 1 is linked to the commitment to Our share to finance the incentives to the network mainly. And the other point is linked to the DTA, which is linked to the provision that we put in the P and L. Let's say that the second point Both, the first one and the second one, by the end of will be reabsorbed because of course when we When we buy the share, this effect is going to be reabsorbed in the TCF.
At the same time, also the DPA is just because in the first half, it's a provisional band. But when we are going When we have performed all the purchase by the clients, the difference will become a realized loss in terms of fiscal Impact, so we don't we won't have DTAs anymore. So my our internal forecast is to stay in the range between 16.5% and 17% in terms of TCR by the end of the year.
Okay. Thank you very much. Very clear.
The next question is from Giovanni Rastoli of Deutsche Bank. Please go ahead.
Good afternoon to everybody. A couple of clarification, again, on the €18,000,000 I was wondering whether you can share with us also the number of clients that will be Impacted by the buyback of those securities. And then a clarification on the comments that you have made on a question before. You The fair value of the notes is clearly more or less 80% of the notional. But in the press release, you mentioned that the notional €480,000,000 So which means that the mark to market is €400,000,000 and not 320,000,000 That you have mentioned.
So if you can please reconcile this. And so this is my first question. The second question, I don't know if it applies or not, but can you share with us what would have been in
the first half or in
the second quarter, The performance fees if the new pricing scheme were already in place since year end. I don't know whether you have performed the backtesting Or not? And the very final question, which is not actually company specific, but it's more sector specific. On the press a few weeks ago, there was mentioned a possibility for the change in the fiscal regulation of Investment income and other income, so, I was wondering whether this Change in the treatment fiscal treatment when introduced, if this can have an impact on the appeal of insurance and financial matters at the industry level? Thank
you. Thank you. I start with the details of the securitization. The senior notes account for €478,000,000 You have other tranches mainly junior for €64,000,000 And you have also accrued interest for other more or less €60,000,000 So the overall vehicle, the total Asset of the SPV or the sum of the securitization is around €600,000,000 We decided to Pay to the client a value no lower than Their investment less repayments and coupons. So the portfolio the price the average price of the purchase will be around 95 Point something.
And with this number, no clients will have any losses And the ad declines on average will be with a return and Annual return in the range of 1%, 3%.
If I can just point out, I said that The provision is difference between the value paid to the clients, which is the 95 point something percent And the fair value that we gave to the notes, so the €80,000,000 are the difference of this number. It is how it works.
Okay. And a number of clients, number of clients consider you have Two different kind of clients. You have the clients who go directly with securitization is about 400 Clients, so we can manage 1 by 1 and then you have some clients involved indirectly Because this securitization is inside some financial wrappers where the impact It's very, very limited because the portfolio is very diversified. So if you focus on the 400, Again, and you have more or less 300 financial advisers involved, we are talking about 1, 2, 3, 4 maximum clients per financial advisor. So it's something that you can manage very well through the financial advisory network.
In terms of performance fee for the LUXIM and for the selection, And Tommaso has the details. Yes. I think that for TELUXIM, which is the major part
of our Well, our performance here won't be any change with the new model basically. With the selection, Of course, we should wait the end of the year by to crystallize the performance, but The accrual, this should be in the range of €37,000,000 So we shouldn't I mean, the impact should be
On the performance fee, just to be Even more clearer, if you think of the new strategy, we are in today the historical series. So we start 0 for the new products. For the existing products, we will reset the historical series in January 1st. So the 1st year will be even better than the current mechanism. In the 2nd year, it will be almost the same.
From the 3rd year, you will start to have the 16 section historical series and you will be the impact. So we do expect The impact in the medium term, we decided to optimize the prices to have an immediate impact, positive impact On the profitability of the bank and so you have a sort of period in which you have the positives Of the new prices and you don't have the negative of the new mechanics, but we are fully committed To work on recurring profits, so also because we have a conservative view on the markets in the next quarters. Sorry, for the last question, I will hand over to Camacho.
Yes, of course, the fiscal reform, which is It's a start at the moment that could be possible to compensate capital gains And other income, today it is possible to make this compensation only in the wrappers, both Financial and the issuance. So if this hypothesis goes on, I mean, it could be possible to do In a very in a simple dossier of administrative assets. Of course, this is not the only The only feature that likes to our clients which invest in insurance wrapper and financial wrapper Just one of the features, for example, for Hirschmann Strapper, there are many other features which are very important for them. And so we don't think that this change could have an impact in terms of volume or our capacity To collect our client to invest in those products. So I think it also could be an opportunity for the administrative asset to find Other ways to serve clients to give them an opportunity to compensate, plus and minus inside Also an administrative dossier.
Yes. And on general terms, I do expect Some incentive to investments in the long term horizon. So the consideration is that probably there will be some special treatment on Specific vehicles or specific solution for pension goals, long term investments. So I do see the same interest. On one hand, the interest of distributors and asset managers To invest the assets of our clients in the long term and from the regulators and institutions To say to invest part of the excess of liquidity in In equity and more in general in the economy.
So move this enormous cash amount Into the economy. So I'm pretty sure that if there is a surprise, it will be a positive one. Thank you.
The next question is from Angeliki
Just three questions on my side as well, please. First of all, on the securitization that you're buying back from clients. Could you give us an idea of the amount of fees that you have generated on the sale of those health care receivables Over time, just to get sort of a rough idea of what was the revenue that you have booked in previous quarters linked to that. Secondly, there has been some press speculation with regards to a sale of the Deutsche Bank Financial Advisor Network in Italy, Finanza, Futuro. Do you have any appetite to look at it?
Have you considered M and A in terms of sort of buying smaller financial advisor networks? And third question, you mentioned that you're introducing some tracker plans on flagship strategies of some of your biggest partner asset manager providers. Could you give us a bit more details on how this works? And Are you paying a fee to replicate those strategies to those 3rd party asset managers? Thank you very much.
Thank you. First of all, in terms of securitization, We have offered this kind of solution in order to increase inflows, not Include not to increase revenues. So the overall profitability of this securitization is almost 0 is just sold under advanced advisory and the Average price the average price applied to securities, let's say, liquid products in general terms is around 0.3. So let's say that the impact on the overall revenues is spread is negligible. And in terms of M and A, Of course, we are always interested in considering any acceleration of the strategy to grow even However, also through acquisition, but as I always say, if the price is right and if the business is, You say, it's easy to integrate.
And so at the moment, We are looking at different targets, but there isn't anything off on the table, let's say. And again, the goal is to out of finance the acquisition. So I don't see any disruptive decision in M and A activity in the next months. Flagship strategy, Thank you for the question. Let's say that if you look at the assets of our asset managers distributed directly On the retail, you have some specific products very successful.
In this case, we ask to the asset manager to have sort of proxy or debt strategies to track debt Strategy in house funds and we're going to pay between 20 30 basis points for the advice of this tracker strategy. In terms of overall profitability, of course, moving from direct distribution of 3rd party To these factors will be pretty significant on our on the revenues of that specific product. And so I do not expect to reduce significantly the assets of third parties. I do expect a sort of rebalancing.
The next question is from Alberto Villa, Interimont. Please go ahead.
Good afternoon. Three questions, if I may. The first one is on the back on the provision, but to ask you a more general question related To the illiquid assets, I was wondering if your appetite to distribute illiquid assets and your clients' appetite will eventually have any Impact from this kind of events or if you think that in the future the penetration of illiquid It's out of the total of the clients' assets under management is going to grow as it has been the case in the last Few quarters in general for the industry. And the second one is on the tax rate, if you can give us an idea of the normalized tax rate in the 2nd quarter or in the first half and if you envisage any change in the tax rate given the changes in the performance This calculation and so on for the future. And also again on the tax rate, if there is any Expectation that the discussions about the minimum global tax rate and so on could affect your business.
I understand at this Point, it doesn't seem the case. But in general, if you expect tax rate in the future to be higher For your company, given the change in structure of the revenues generation and the potential changes in regulation And finally, you mentioned strong July inflows. I don't know if you can give us a more Size target for the entire 2021 in terms of net inflows, specifically on the managed assets. Thank you.
Thank you. So starting from the appetite For illiquid assets or the strategy for illiquid assets, I don't see any significant changes. First of all, we provide this solution in order to increase the diversification of the portfolio of our clients and specifically for Professional or private clients. So since it is just about diversification, it's not linked to Higher profitability, I don't see the case. Of course, we will assess All the procedure and the responsibilities internally, externally, but let's say that I don't see I consider this event as sort of a breach.
In the last 20 years, we have already seen several problems with several problems. This is the first time we decide to We like to protect our clients just because it's a sum of situation. So you have the liquidity of the underlying, you have the pandemic, you have The quality of the underlying and the fair value missing expectations of all. But let's say, I do not See, the bank will change the approach to the portfolios. This is basically driven by diversification.
Since these products are not generating extra revenues, but in the case of securitization, probably the remuneration And the revenues are to the minimum level. I do not see specific impact on the P and L, neither on the P and L No, on the ability to provide diversified solution to our clients. And On July inflows, July is very strong. I do see these inflows and the contribution also asset management products as a consequence of a very So on performance of the market, there is some correlation effect, positive correlation effect due to the seasonality of August And September, due to a very conservative, say, due On the market for the next, let's say, 2, 3 quarters, we prefer to have Achievable target, it's in the range €5,500,000,000 to €6,000,000,000 If things continue like today, as of today, we are of course closer to 6% than 5.5%. And the mix should be in line with the previous 6 months.
Also July has a mix confirming the positive trend of Asset Management products for this year. In terms of tax, I hand over to Tomas.
Alberto, yes. I think that we gave a medium term guidance on the tax rate. We should we expect to stay Above 20% in the range of 2021, 2022. Of course, the first half has been affected by many extraordinary FX like from one end the provisions, on the other end the contribution of performance fees. So in this quarter and this first half has been very low, but I think that our guidance will be Confirmed and we don't see also any impact in terms of taxation in our Luxembourg, for example, profits linked To the new regulation that could be worldwide.
So from this point of view, we can confirm Our guidance, there is some volatility, which is linked to the contribution of performance fees or other One off, but the guidance is confirmed.
Thank you.
The next question is from Filipe Puccini of Kepler. Please go ahead.
Yes, good afternoon. One clarification on performance fee, your mechanism, sorry for a couple of the follow-up mechanism provision. On the new material performance for Laxim, I see the point that the reference base for next year will be the price at the end of December this year. But given that the crystallization is on a daily basis, if the 1st day of trading of 2022, it will be above The price of December 31, 2021, it will become the new reference base of no more December 31, but January 2, 3 and so on. On the provision, very briefly, the Fund that the client received can be used whatever they want or must be should be invested into Banca Generali product.
And on the new asset, basically new lending portfolio to get on your balance sheet, Do you plan for the future CR term return given that they are commercial receivable versus Italian half? So At the end, there will be the final statement we pay and should pay basically the principal. Thank you.
Thank you. I start from provision. Let's say that we have a business plan We've say a yield in the range of 2%, 4% starting from the Fair value for the next 5 years. It won't be posted in the net interest margin, but in the Trading gain. And it can be, let's say, posted only once we have already repaid we repaid all the capital.
So you have a sort of, let's say, So you have a sort of, let's say, J curve, let's say, limited J curve. So you have the fair value, you start to repay The investment and then you can release the performance. In terms of Performance fees, we are finding the answer. I know that there is some Restriction in the 1st weeks, I think 1 month, but I'm not sure. So I hope to give you the answer As soon as I receive the right one, if not, we will provide the answer after the call.
And I don't remember there was another question on the provision. Sorry, I lost the
Yes, yes. If the money To clients, we have received an estimate by the client in those outside of the bank or will be asked to reinvest into other products of Banca Generali?
Let's say that I do expect that limited very, very limited outflows and I do expect reinvestments The greatest part of this in other solutions. I don't see the case of outflows For these reasons, so it will be they will be reinvested, so clients will reinvest Hopefully, in progress with higher profitability, as I say, we will see.
Okay. Thank you.
Welcome.
Your next question is from Luigi Develis. You must please go ahead.
Yes, good afternoon. Just some quick question on the recurring business. On the NII and the outposts to the network, can you provide For the next couple of quarters, on BD Saxo, could you give us an update on the platform performance trends and new products Expect it to be launched? And on the other fees and new revenue stream, entry banking fees, what do you expect for the second half compared to the first half?
Thank you. I'll start from BG Saxo and other revenue streams. What I'm seeing in the market is that due to low yield and low volatility, there is An impressive interest in structured products and lower interest in trading activity. So I do see for July starting from June, so July and probably August, Higher results coming from structured products and let's say not exciting numbers in terms of Trading for new to this low volatility, while I do see a sort of Linear growth in advanced advisory. This is for the new revenue engines.
For the more Traditional, say, other fees. So for banking fees, I do see, say, a sort of a smooth linear behavior, while for the front fee, It depends from it depends by the volatility of the market and the performance of the clients. So It's difficult to have a to project or to have a forecast of this contribution of this revenue. So but at the end of the day, the overall contribution of other fees will grow over time. And the last question was about NII, if you can give and look at Tomasso.
NII, well, we had a
guidance, Which is basically confirmed probably what the impact of the purchase of the notes will be limited. Of course, as we said before, the yield that we expect is not going to be recognized for Rata temporary. So I mean, the impact of the net interest income of 2021 will be Very limited in so our guidance is between 2% and 4%, below last year and I think it will be It will remain the same range. In any case, they are not really negligible number in terms of total profitability compared to the total profitability of
Mr. Mosf, there are no more questions registered at this time.
Okay. Thank you. I have the answer For Filippo, let's say that in the mechanism There are there is no limitation in working out the performance fee Since the 1st day, of course, this is an independent decision of the asset manager in Luxembourg To apply sort of smooth mechanism in the 1st days, it must be something Sustainable. So I do believe that in case of volatility in the 1st days, The impact will be smooth in to of course to provide the right performance sheet to clients.
At the moment, we don't have other questions, Frederic Kerrest.
Okay. Thank you very much.