Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Banca Generali First Quarter 2019 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 Mossa, CEO and General Manager of Banca Generali. Please go ahead, sir.
Good morning, and welcome to our Q1 results conference call. 2019 started very well, and I can anticipate that we see further improvements in the numbers in the second quarter. We closed the Q1 with €61,100,000 of total assets. That is the highest level ever for the bank. Thanks to very, very good performance of the underlying assets and thanks to solid inflows.
You already know that in the Q1 net inflows, total net inflows were at €1,400,000,000 And considering also the inflows in April, we are very, very close to €2,000,000,000 In terms of FA's network, we exceeded 2,000 financial advisers. And probably even more important, we exceeded in terms of portfolio average €30,000,000 each. And you know that for us portfolio average is approximately the quality of our financial advisers. On P and L, reported net profit at €66,600,000 that is one of the best quarter ever for the bank, thanks to a growing diversification among the recurrent revenues and a positive contribution of performance fee. Recurring net profit has slightly increased at €32,400,000 and we maintain a solid capital position also after the first implementation of IFRS 16.
That implies a one off of EUR0.8 billion, EUR0.87 billion depending on the capital ratio we consider. In the next slide, or slide to Page 4, we have a focus on the new accounting principle IFRS 16 that is the new accounting standard for release contract and it has become effective from this year, January 1. Basically, you have 2 main impacts. The first one is on the P and L and the second one is on the balance sheet. On the P and L, the impact is negative in the 1st year of the contract, of the lease contract and then you have a recovery in the second part of the contract because at the end of the day is a zero sum gain.
So looking at in the bottom of the page on the left, you can see the impact on the P and L. You have a restatement of some items from rental cost to depreciation and you have some passive interest. Total impact is around 400,000 euros On the balance sheet side, instead, we already said that the impact is about 0.8 for the Czech one and 0.87 for the total capital ratio. Coming back to the results, page 5, we have a snapshot of our P and L. So we have a very, very solid increase in the total bank income plus 17% and mainly driven by an increase in the net interest income as well as in the gross fee And I said that performance fee played a very important role.
On the cost side, we have some one off and an acceleration of the cost for the implementation of the strategy. So net is 7 plus an increase of 7.5 percent, net of 1 off and IFRS 16 is 5 0.8%. In this quarter, we have also positive contribution from the items below the operating line. So net net and the net profit is €66,600,000 At Page 6, we can see the breakdown of the net profit in 2 main components. As we said, the recurring profits and the variable profits.
Variable profits increased from €17,000,000 to 34 €1,000,000 thanks to the sharp recovery in the market. While looking at focusing on the recurring profit, we have a positive impact from the net interest income. So the recovery of the and the normalization of the year and a temporary drag from the management fees due to the dip in general. And we will see later during the presentation also the recovery in the management fees. So now in the next session, we will see as usual all the single items starting from the net financial income, Page 8.
Like for like basis, as you can see in the chart, the net interest income increased by €1,000,000 This €1,000,000 is partly offset by the implementation of IFRS 16. So the net result for the quarter is €15,900,000 with a marginal increase in the yield over the net interest income from 0.7000000 to 0.71000000 on year on year 0.64000000.71000000. In the quarter, we had also some trading gains linked to mainly to the trading on currencies. H7 is useful to understand what's happening on the yield of the different parts of our total assets. First of all, we reached €10,000,000,000 of total assets.
And as expected, the liquidity in the quarter went down below €1,000,000,000 as announced in the previous conference call in favor of the banking book. In the table below, you can see below the bar chart, you can see the different yields, 2 positive aspects. The first one is that the cost of retaining cash decreased from 0.25 to 0.21 and the yield in financial assets increased at 0.8%. And I'm very positive on the positive contribution of net interest income in the next quarters. We continue to maintain a very conservative approach.
You can see maturity and duration for both total portfolio as well as had to collect and say with a maturity of 1.4 and duration 1 point 0. Page 10, there is a focus on management fees. Management fees are slightly down on a quarterly basis due to the impressive correction of the markets at the end of December. So Q1 at 155. I think that's really interesting to focus on the monthly trend.
So there is a focus on the, let's say, the trend in the monthly management fees. And as you can see, in January, there was a contraction from 52.3 to 50.6 and then a progressive recovery up to in March 52.8. And we are very optimistic on the management fees also for the Q2, thanks to the expansion of the assets and rebalancing in the mix of the products. And the total profitability on the management fees in March was 1.42 percent, so in line with our business plan. Page 12, we can see the other fees.
The other fees increased at €17,800,000 So on year on year basis, we have an increase of around 7% despite a significant reduction in the entry fee linked to the managed portfolio. You know that the front fee in the insurance and the asset management product are strongly linked to the performance of the market. So after the correction in January February, these entry fees were very, very poor. Despite this negative contribution, overall, other fees climbed at 17.8 percent basically thanks to an acceleration a significant acceleration in advisory fees. On the others entry fees, in particular the focus on certificate and structural products, you know that this is part of our business plan.
In the 1st 3 months we had the new issue for €50,000,000 in April, in just 1 month, we almost doubled the total issue. So there is an acceleration on the deployment of this new initiative on the network, and I'm very confident of the next quarter on the positive contribution of Runfee as well. Next page, Page 12, performance fee. As I said, positive contribution for the quarter. Also the 2nd quarter started pretty well.
In the Q1, the total performance fee was at €35,200,000 that equals to 8 basis points on total managed assets. The new performance fee mechanism applied to almost 50%. And as I said, in April, we had a very positive contribution of both offering, the first mechanism to work out performance fee and then a new Loop stream. And more or less in April, the contribution was fifty-fifty. Page 13, we see the cost starting from fee expense that overall decreased by €2,400,000 so from 96 €700,000 to €94,300,000 payout to the network.
In the Q1 there is a strong seasonality, some one off. So it's difficult to comment the single data. And let's say that overall, we are confident to confirm our target for the full year. And for the payout to 3rd parties, you see how we continue to reduce the overall cost of the 3rd party, let's say, the preferred asset advisory mandate to our asset management platform. Page 14, we can see operating costs.
So the total costs suffered 2 main things. The first one is one off, one off for moving the quarter and one off for IFRS 16 and then an acceleration of the strategy. We again, due to this seasonality, I think it is important to confirm our year end guidance in the range of 3%, 5% increase in the core operating costs. On the right side of the page, you see the breakdown of core operating cost and this is useful to you to understand the restatement. As you see, we have higher depreciation for 4.4 percent and offset by lower rental costs of €4,700,000 On top of that, there are the passive interest that we already commented in the net interest margin.
Page 15, we have some ratios. Operating costs on total assets reached the lowest level, 0.33 and the cost income confirms the efficiency of the bank with a costincome adjusted, so excluding performance fee and some one off costs at 40%. Page 16, we have the capital position. First of all, we confirm ratios well above the FREP ratios. 2nd, as we said, there is a one off impact due to the full implementation of IFRS 16.
And 3rd, very conservatively, we assumed 100% of earnings of 1st quarter earnings as a retention for covering the dividend policy, the new dividend policies of €1.25 per seflora as a dividend paid for 2019. So to sum up and looking positively at the Q2, I'd like to say that we see an acceleration of most of the revenue sources and in particular, positive news on management fees. We see we saw an organization in March and we see an acceleration we have seen an acceleration during this quarter. Positive very positive trend in April and in May for the fee linked to structural products and a strong acceleration also in advisory fee, coupled with the guidance, the cost control of the guidance of 3%, 5% in the, let's say, core cost. Now moving on to total assets and inflows.
As we already said, we reached the highest level for the bank in term of total assets, €61,100,000,000 And as I said, in April And I think that it's very positive to see managed And I think that it's very positive to see managed solution where we have a well balanced mix between a la carte funds with an acceleration of our Luxeim offering and the brokers with increasing interest in the insurance rampers. Page 19, look at the net inflows. Net inflows for the quarter up to 1.4 €1,000,000,000 2 very positive aspects. The first one is about assets under administration because as we said there is growing interest in assets say in the asset under advisory and in structural product. And second, if you look at the total net inflows by acquisition channel that is the chart in the middle of the page, you can see that the total contribution of the existing network reached 75%, probably one of the highest level ever for the bank.
And the negative contribution of the FAs that left who left the company is at minus 4%, and the total is one of the lowest level of the bank. So very, very low churn rate, high standardization of our existing sales force and the growing contribution of the historical financial advisers. The last information in this page is about new assets under advisory and here we are well above our expectation with a number for the Q1 above €3,000,000,000 that is almost 5 percent of our total assets with an increase of more than almost €700,000,000 in the first quarter and where the profitability, let's say, continue to maintain very solid in the range 45, 50 basis points, as a gross piece. Page 20, you see the network. We exceed 2,000 financial advisers.
And as already said, we exceed the portfolio average €30,000,000 And moreover, even more important, more than 90% of total AUM are managed by financial advisers with more than €15,000,000 That for us is the minimum level to provide this kind of advisory in the long run, in the long term. And almost 68% of financial advisor exceed this level of €15,000,000 And this is, as you know, something unique for the bank compared to the benchmark and to the competitors. On the right of the slide, we see the recruitment trends in the Q1 'nineteen new colleagues. And again, as you know, in this 1st part of the year, we continue to maintain a conservative approach, waiting for the full disclosure of cost for the competitors, and then we are confident to normalize the path of growth of reform equipment. We confirm the guidance of 100, 120 financial advisers for the end of the year.
Page 21, with the focus on April numbers. As already said, we are very close to the €2,000,000,000 from the beginning of the year. In April, total new inflows reached €545,000,000 Here, you have plenty of new positive aspects. First of all, we are 35% in managed assets with a growing interest in our Luxim platform. 2nd, we continue to see positive trend in advisory contracts.
And 3rd, as already mentioned, more than €40,000,000 in new issue of structured product. On the right of the page, you see also recruitment for April at 7 new financial advisers with a total new recruitments from the beginning of the year at 26 new colleagues. So to sum up, first of all, in the 4th in the 1st 4th month, we see a tremendous interest in the advisory fee contract, well above our expectation. So a significant acceleration of one of our driver of our strategic plan, and we have several initiatives to maintain this path also for the year. 2nd, well mix in the assets under administration, so the stock and bonds with a growing interest in structural products and part of this AUC under the advisory contract and a progressive return of interest in asset management products and particularly in our looks in offer.
Page 23, we start with a business update. The first part is on our Luxembourg platform. We exceeded in the first 4 months €15,000,000,000 of total assets. In particularly, at the end of April, we reached 15.5%. This is the highest level ever for the bank.
This is due mainly to two reasons. The first one, an impressive performance of our product in the 1st 4 months, up 9.4% as well as a growing interest in terms of new inflows with net inflows of our LuxeIM up to almost 6 €100,000,000 3rd, you can see in the bottom of the slide, the growing contribution of our new offering at 54% of total AUM. Page 24, as I promised, you see an information of the cost of our Luxe Inn, we compare our offering with the top peers, so the listed peers, the top 4, 5 players in Acelity ranking, plus the top 10 asset manager in 3rd parties or international asset managers. And you can see that ongoing charge, the weighted average for Banca Generali of the Loop's team is about 2% against an average of these 15 players, so peers and third party asset managers of about 2.2 with a minimum of 1.8 and a maximum of 3.1. On the left of the page, you see the asset breakdown by asset class.
As you know, this 51 new investment strategy aims at driving a more diversified portfolio. So all the strategies are built to increase the diversification for our clients and you can see that it's a well balanced portfolio between equity, fixed income, multi asset strategies as well as liquid alternative. So to cut long story short, we are very comfortable on our LuxeMO platform. Ways to complete the offering. The second focus is on our digital mindset pillar.
And again, here we are well above our expectation and there was a tremendous acceleration in the release of the strategy. As you know on the front end until now we were considered the best in class from the financial advisory perspective, but not from the client. And now I can say that we are ready to be best in class also for clients. We have just released our new mobile banking app And they say that the rating and the revenues and the reviews are very, very positive. And you know that we have been working on this new app mobile banking for the last 18 months.
So we are very proud of this release. We complete the deployment also of the fully digital onboarding process to open current accounts. And we concluded the piloting test with Saxo for the cash products and we started to the rollout on the network. So in June, we will start to be, let's say, up and running also with the Saxo initiative. The 3rd part, Page 2.6 is about the 3 strategic operations of the last year.
Just to give you an update, starting from Valeur, the closing is expected by the end of June, the beginning of July, and we are seeing a very high interest and very positive feedback both from clients and bankers in Switzerland. So there's a great interest in the brand, in the project. So we are confident to accelerate in the 2nd part of the year also on this part of the pillar. You know that the strategy as Visa is a new revenue engine, so to export our model also internationally, so in Switzerland. Net some partners also here good news.
First of all, the closing is expected by the end of June beginning of July. And in the next 2 weeks, we will be with the network to present to the new strategies. So the new portfolio management lines developed in cooperation with Nextel. So we are ready to start also with very, very important part of the project to relaunch also the portfolio management lines. And last but not the least, we started the process to buy 20% of the stake in BGSACCO for the governance.
The internal pilot was successfully complete as I already said and we are ready to launch the rollout on the network. And again, here we will have some extra positive news from the new release of the app version of Saxo in the 2nd part of the year. So all the projects are progressing very well in the right direction. The feedback from the networks, so the financial advisors as well as clients are very good. So I can say that the Q2 started very well, and I'm positive to exceed numbers starting from this year.
Thank you. And now we are ready for answering to all the questions.
Excuse me. This is the COSCO conference operator. We will now begin the question and answer session. The first question is from Gianluca Ferrari with Mediobanca. Please go ahead.
Yes, good afternoon, everyone. I have three questions. The first one is on the net interest income. I understood the one off effect of the IFRS 16. What should we expect for full year 2019?
Is something around $65,000,000 a proper assumption? The second one is on the mix of inflows. Year to date, most of the flows went into Life Traditional and Banking. We also saw a bit of decline in the margins of the Asset Management business, 141 basis points. I was wondering if in April you are seeing some changes and some normalization in terms of flows with most of the flows going back in asset management products and maybe with a higher risk profile from clients in terms of asset allocation.
The last question is more something a bit provocative. I saw your chart where you are comparing your pricing with that of peers and you are in the low end of the range. It seems that some of your competitors are even repricing. And at the moment, we are not seeing any attrition in terms of outflows. So the question is, why don't you raise fees then?
Thank you.
Thank you, Gianluca. Let's say that starting from the last question. I mean, I normally consider the short term and the long term. In the short term, it's difficult to see the full effect of some strategic choices. I don't think and I'm pretty sure that it's not the right time to increase prices.
We have to increase the quality of the services. And if you look at all the asset manager, so the international players, so the best in class are reducing prices. So my impression that there is a major focus on the short term than in the long term. And as you know, instead for the bank, the long term comes first. There is no free lunch, honestly speaking.
2nd, on net interest income, I'm very confident to overachieve your €65,000,000 target. I'm definitely sure to be much higher. And on the mix of the inflows, consider that in the Q1, we decided to focus on the traditional life insurance and to launch in the best way the advisory service, the advisory fee based contract, and this is mainly driven by asset under administration. Now that the project is fully in place and that there is a stabilization of the also, let's say, on the client side, we started seeing also positive inflows, in particular in the Luxeam and the stabilization in portfolio management solution. So I see a rebalancing in terms of products.
I still see a more conservative approach in terms of asset allocation. So I don't see the case for an increase in the equity exposure in the following in the next months. In terms of profitability, I see room to increase the profitability over the Q1 over the average Q1. And numbers for record and may confirm some positive trend in general terms in the Asset Management Products. Thank you.
Fantastic. Thank you.
The next question is from Philippe Poprini with Kepler. Please go ahead.
Yes, good afternoon. Two questions. The first one is on trading profit. Could we take the figures that you analyzed in the Q1 as basically the total amount more or less that you plan to generate on a full year basis? And the second one, just a clarification on the Slide 23 of the presentation on the evolution of the maximum base assets.
I see that you plan to increase these assets by €400,000,000 at the end of the year with most of the increase from the Unixim. Does it mean that we do not plan to any runoff of the existing BG selection and BG CCAP in the meanwhile? Thank you. On the I start from the second question and then I will refer to Tomasio DiRusso for the first one. And let's say that we have a projection of outflows of €100,000,000 per month in the selection.
So €1,200,000,000 in full year. And we are pretty confident to cover every euro of outflows in the selection with €1.52 in the LuxeIM retail distribution. While we should have a positive contribution from the institutional share classes, thanks to the expansion of the wrapper solution. On the second question on the second question,
the trading gains of €4,000,000 in the Q1 are mainly linked to some activity of clients which operates in currencies and it's a normal operation of our clients. So I mean it depends of course, it's always linked to the market. So we can use to establish the trend for the full year. But I think that in the Q1, we have been very active in this activity. So maybe it could be a little bit lower than 1 quarter for 4.
Yes, exactly. As you know, we expect a lower contribution from P and L in the same profit and loss in the banking book. As Tomasso said, it's not exactly traditional banking book activity, but it is partly linked to the trading activity on currency market of our clients. And again, we see positive sign compared to our initial projection, but we don't see still the same contribution over the last year.
The next question is from Elena Perini with Bancaimi. Please go ahead.
Yes. Good afternoon. Just on performance fees, I was wondering if you could update us with the amount you gathered in April because you talked about the mix, which is approximately fifty-fifty between the new method and the old one. So I was wondering about the amount. Thank you very much.
Yes. Let's say that the April performance tea are driven mainly by the very good performance of the products. Most of them reached the high watermark level. So in April, we are above €20,000,000 And they say that 70%, 75% of the total assets are at or very close at the high watermark level, so between minus 1 and 0. And as you know, the new performance C mechanism, the Lux C mechanism is based on 12 months high watermark.
So if the markets confirm this level, there is opportunity to see a further acceleration of performance fee for the, let's say, the next quarter. The projection of the selection instead is almost 0. So more to come probably from
Mr. Masa, there are no more questions registered at this time.
Okay. Thank you all for the participation on the conference call. Bye.