Welcome and thank you for joining the Banca Generali 9 months 2025 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. 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 afternoon and thank you for attending our third quarter results conference call. Let's start by saying that despite the challenges of the last quarter linked to the tender offer of Mediobanca, we achieved very strong financial results with strong support from recurring commission. Also, the commercial activity was very solid thanks to the ongoing contribution of the existing sales force. Today we're going to focus on two major projects, Alleanza and Intermonte. I will spend a few minutes also on the main project on the core business. Let's start as usual from numbers. Moving on to net profit, we closed the third quarter with net profit at almost EUR 115 million, great part of which driven by recurring net profit. Also, the variable component is catching up. More good news for the fourth quarter on net profit, well supported by all the components.
Page five we can start with the net financial income. As you can see the overall net interest income closed almost flat quarter on quarter. This is the result of expanding assets and just a slight reduction of the net interest margin. In particular the net interest margin closed at 202 basis points and the overall contribution for the quarter of the net interest income was EUR 81 million on the net interest income. Now we are confident to close at around or above EUR 320 million and we are confident to confirm the same level also for next year. Moving on to page six, total gross fees as previously mentioned, very strong result from the recurring component of the P&L. As you can see the overall contribution for the third quarter was above EUR 280 million while variable fees closed higher.
Quarter- on- quarter close to EUR 30 million and we already had EUR 20 million in the fourth quarter of performance fee and almost 50% of our assets in Luxembourg are close or at the high water mark. Deep diving the gross fees, the current component. Page seven we start from the investment fees. Here you have the same trend as the net interest income, asset expansion and stable margin. We are confident to confer margins in the range 1.4-1.42 for the end of this year, but also for next year. We are confident to see an expansion of the overall asset under investment. Moving on page eight the other leg of gross recurring fees, so other fees. Here you have positive news.
First of all of course the numbers are stronger thanks to the inclusion of Intermonte but also once we compare numbers like for like you see solid brokerage commission, a recovery of entry fees, and we will deep dive on the reason behind the acceleration in September of certificate. In particular, while banking fees close a little bit lower due to a review of the prices of the current account, let me say that we are confident to see very robust entry fees for the fourth quarter and steady growth in the brokerage commission. All revenue are very strong, confirming a positive trend, confident to maintain and stabilize the net interest income, confident to expand the recurring fees, both thanks to expansion of asset under investment and solid numbers for the other fees.
Moving on to the cost side, page nine, here is business as usual. Payout ratio is in line with guidelines or a little bit lower due to some positive seasonal effects. Overall payout to the network below 46%, overall payout to third parties around 6%. Here, no news, good news, very confident to confirm the current targets. Page 10, operating cost, also in this case no surprises. We have some non-core items linked to the setup cost of new business line, the insured banking, and also for the tender offer received from Mediobanca. Excluding these components, let's say that overall total operating costs are well under control. Focusing on core operating costs, again, no surprises.
Here it is important to highlight the fact that we set up the AI business and we set up the issue banking business, so part of the costs are for investment in new business line, and we will see later some numbers on our projection of these new business line. Page 11, the ratios operating cost on total assets achieve the lowest level like for like, so 0.23, and cost income at or close to the lowest level, always negative. Like page 12, we have the usual sum up, so we are pretty proud of the results of the third quarter considering also the uncertainty of the time. Solid operating profit also excluding performance fees. We recorded also better non operating charges, basically driven to a lower regulatory contribution to banking and insurance funds.
The overall tax rate was a little bit lower at 24.2% so this allowed us to achieve the best result ever in terms of recurring net profit at EUR 272.8 million. Next chapter, balance sheet, as I say, is a game of assets expansion with slightly lower margins. In particular, page 14, you can see that the cost of funding is slightly down in line with the trend of the interest rate of the market, and you can see that the overall deposits are higher, EUR 2 billion year-on-year comparison. Page 15, same trend. The overall interest-bearing assets are up by EUR 2.1 billion, and the yield on interest-bearing assets is slightly down. Page 16, we have the capital equity ratios, also here in line with the trend already communicated during the year. Total capital ratio close to 20%.
Also once considered the impact of the CRR3 and the first time consolidation of Intermonte. This contribution was partly offset by higher nature net profit. As usual, the dividend provision is in line with our current policy, so at 83% of the net profit. Leverage and liquidity coverage ratio and net stable funding ratio well above the requirement. Let's go in the third part. Net inflows, assets and recruiting. They said that quickly. Commenting. Total asset we closed about EUR 110 billion. More than EUR 73 billion invested in assets under investments. Page 19, you can see the breakdown of assets under management. First of all, confirmation of very strong presence of wrappers above 50% of the managed solutions, acceleration in in-house financial wrappers, acceleration in in-house funds. This is driven basically by the net inflows. Page 20-21 you have the usual representation of the inflows.
starting from page 20 you can see that the asset under investment accounted for almost 50%. The greatest part coming from asset under management. If you focus on asset under management page 21, you see the most comes from financial wrappers and in-house funds. You can see the ongoing rebalancing from third party funds to in-house funds. Now they say that in-house funds account for 50% of the overall retail funds. More will come. Page 22, you have the net inflows by acquisition channel. Very solid numbers from the existing network. Despite three-four months of challenging markets driven by the tender offer. Very positive. Also recruitment went pretty well. Of course the meeting is more in favor of young talent, more difficult to recruit during this uncertainty.
Now I can say that in October we start again recruiting also very senior partner. Again also in this case I'm pretty confident to see strong results in the next months. Page 23, we close with the October numbers. October numbers were very strong. EUR 1.2 billion. Also thanks to recruitment in Switzerland we recruited three senior bankers. Almost EUR 800 million. Three top senior bankers. Very confident that they will contribute to the success of our Swiss initiative. Also the Italian contribution is pretty solid. As I say, we are gaining momentum in recruitment. Confident to close the year very well.
Now let's enter the last part of the presentation where I will focus a little bit more and we'll dedicate more time as it's really important to start giving some numbers on Intermonte and Alleanza. On page 25, you see a box on Banca Generali, Banca Generali core business. Just to say that today we will focus on Intermonte, Alleanza, that we are continuing investing also in our core business. First of all, if you consider our major assets, so the financial advisors, very confident to enhance our financial advisory network thanks to some specific project, very important. The first one is the project related to the young talent. As you saw in the recruitment numbers of recruitment, we are more and more focusing, increasing, accelerating numbers of young financial advisors.
The second main project in the distribution channel is about teams, so the possibility to work together, both senior bankers or senior bankers with young talent. We are working to increase the personalization of this contract among bankers. This contract will be useful also for our insure banking project. Third, probably even more important, you know that we have some specialization in the network. For example, we have the sustainable advisor number are almost double in just a bit more than one year. We are focusing some bankers on the investment corporate banking capabilities. It is a way to fidelize more and more our financial advisor, giving them the possibility to focus on the topics they prefer.
This is about how to enhance the financial advisors on the product side, very focused on our asset management capabilities, very confident to expand numbers for our Lux IM platform just because we launched a new family of products. One example, in the last three weeks we launched our first initiatives of Protected Fund and some other initiatives on entering the equity market. Gradually we collected more than EUR 200 million in three weeks. I am sure that more will come in the next week. It is all about internalizing margins and developing our Lux IM platform. We have been working for the last six months in launching also dedicated initiatives in Ireland for active ETF. I will dedicate more time on these initiatives in next conference call. Now, let's focus on Intermonte and Alleanza. starting from page 262, strategic pillar of the acquisition.
You remember I said that for us this acquisition was a game- changer. It's a game- changer from a revenue perspective. Margins as we expanded our capabilities in global markets and we start seeing the first results I was mentioning certificate. October has been the strongest month in certificate both in terms of volume and also in terms of margins as part of the diversity structure was closed by Intermonte and thanks to the expertise in these assets, I'm sure the numbers will expand in the next months. Expertise, more expertise in global market as well as the possibility to expand the business of our financial advisors in the corporate investment banking. In this case again, some numbers, the business is already there. We organize more than 100 meetings with top entrepreneurs already client of the bank. We are close to deliver some mandates with these entrepreneurs.
The potential is very huge. Why we are so confident on this deal? In page 27 you see some numbers. You know that the total equity not listed, so small and medium enterprises basically amount to EUR 1.5 trillion. If you look at our client base, we have more than 3,900 clients, entrepreneurs with more than EUR 160 billion of estimated value. In our portfolio, in our clients, we have more than 10% of the overall equity not listed small and medium enterprises. We are the best positioned in terms of distribution. We have more than 600 financial advisors with more than EUR 50 million average, EUR 100 million. We have the clients in our portfolio and we have the competencies and the professionals to provide investment services. We are Intermonte, of course.
Remember that one major priority for the cloud banking will be the generational wealth transfer and some projection estimates at more than EUR 300 billion of transfer within 2033. On the page you see the projection of revenues of Intermonte in the next five years. We are confident to more than double the overall contribution of net banking income of Intermonte, so from EUR 42 million at the end of 2024 when we closed the deal to a range of at least EUR 89 million. Three major components: asset under custody and trading. What are we talking about? What I was dealing with previously for structural products, certificate derivatives, managed product, the example of Protected Fund launch in October, and investment banking. As you can see at the bottom of the page, cost income end of 2024, 80%, end of 2030, less than 60%.
It means that the extra net banking income has a cost-income that is almost in line with the existing banking cost-income of the bank. It is very good operating leverage in this case. Intermonte, as I mentioned, will be something very important for the bank, disruptive because we have the clients, we have the competencies in the network, and now we have also the capabilities, the internal capabilities to work on the entrepreneurs. The second project, page 29, is about Alleanza and let me give you some numbers of Alleanza. Alleanza, the portfolio of the clients of Alleanza amounts to almost 2 million clients, of which more than 55% are affluent clients. They serve this client through a paid agent insurance channel with almost 10,000 distributors. Of these 10,000 distributors, 2,700 are registered to the financial advisory book, so they could work as financial advisors.
Actually they do not have a mandate. Actually they can just offer insurance products. The quality of this distribution network is very high. You can see how they improved their results over time. Now they are the third layer in terms of volumes every year. They said it is a very performing distribution network. Bottom left you see probably the most important part of this slide. The overall life reserves account for more or less EUR 40 billion. Internal projection estimation of the potential of the clients gave a number of around EUR 170 billion. It means that the existing portfolio, the existing clients manage more than EUR 120 billion with other intermediaries, basically banks and post with banking products and asset management products or assets under custody. Here the opportunity is pretty clear.
Alleanza can work on a wider range of products in terms of bank their client in terms to say, to reach the clients with more sophisticated solutions. Also, say balancing the bank insurance project. You know, all the banks are trying to penetrate the insurance business. This can be seen also as a defensive move where we start banking their clients, expanding revenues and defending their existing portfolio. On our side, we will enter the affluent business without distracting our private bankers from our core activities that are power clients. The combination will allow us to catch up with the penetration in the affluent segment. How we can offer a page 3, 6. We have the details to page. Sorry. Now sorry is in. We will offer both banking products as well as we will extend the distribution of our insurance wrappers to their clients.
You know, one of our capabilities has been to set up and to develop a dedicated insurance wrapper in which you can combine the best solutions of external asset managers. We will provide support to the Alleanza network and advise them with portfolios to distribute these kind of solutions also for their clients. The numbers we expected to achieve are significant. I mentioned in previous meetings that we do expect a sort of penetration of 1% of the potential of the client per year. Here you see the projection. In the case of Alleanza for the next five years we are confident to achieve at least EUR 7 billion of assets, of which EUR 3.35 billion invested in banking and assets under custody products and EUR 4.5 billion invested in these insurance wrappers, of which almost EUR 3 billion invested in, say, BG Fund Management products.
Here is, of course, the business come from the advisory fees, the advisory services we provide in this solution and the underlying of the insurance business. The overall impact in terms of net banking income is in the range EUR 40 million-EUR 50 million. The cost income conservative. Presently we consider the cost income of the bank. I am also confident that the exposed cost income will be lower. As you can see, also, unanswered is transformative because it will allow us to expand also in the affluent business focusing on a third party distribution. Very close to the bank, we share [RelyOn], and Intermonte is an accelerator, is a new engine to accelerate our existing business for product lines. The combination will accelerate the trajectory of our growth path. Page 32, there is just a slide on our targets for this year, commercial targets.
Just to say that, you know, the tender offer of Mediobanca had some uncertainty during the summer and despite this challenging time, we announced some targets at the beginning of the year. I can say that I'm confident to overachieve in terms of total net inflows, to close definitely higher than the EUR 6 billion announced at the beginning of the year, and also to confirm the target in terms of product mix with assets under investment above the EUR 3.5 billion. As I mentioned, I start seeing also very good signs in recruitment activity, while the existing salesforce has continued to work very well during all the months of this year. Now I will hand over for the Q& A session. Thank you.
This is the Coruscal conference operator. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one. At this time we will pause for a moment as participants are joining the queue. First question is from Giovanni Razzoli, Deutsche Bank.
Good afternoon to everybody. I have two questions, two clarifications and one question. The question is about the trend of inflows and recruits. I wonder whether during the offer of Mediobanca during this uncertain period you suffered exit from bankers and if so, whether the effects of these exits have already been fully factored in into your monthly flows so that from now on, from October onwards, the commercial data of Banca Generali will reflect only the ongoing business and the new recruits, with no more impact from previous events. So to say. That's my first question and then I have two clarifications. The first one is on the insure banking project. Is it fair to say that the network of the agents of Alleanza represents around one third of the total of Assicurazioni Generali? Is my understanding correct?
The last clarification is on the guidance from net interest income. I apologize, but the line was bad. Maria, when you mentioned this, you said that for 2025 you expect an NII above EUR 320 million, right? Thank you.
Thank you, Giovanni. First of all, inflows and recruitment. You are right, of course. During the summer we had some exit. From June to September the overall contribution of net recruitment, so in less out, was almost zero. I'm pretty confident that we have almost factored all the exits and I start seeing the new colleagues. From November I can say that we are again in business as usual with some positive cues in terms of recruitment. From that point of view, my say optimism. I do not see more extra impact for the issue banking project. I can give you a rough estimate. We say that overall general distribution channel account for 50% of the whole industry, should be around EUR 100 billion. Being Alleanza 40, I would say that is more or less 40%. This is, I should ask generally the regulatory number.
If I have to guess, I would say 40%. Slightly above a third for the guidance in terms of net interest income. You are right. We confirm for this year net interest income equal or above EUR 320 million. The same level confirmed for next year. Thank you.
Thank you.
Next question is from Gian Luca Ferrari Mediobanca.
Yes. Hi, good afternoon. Two for me, please. The first one is on the EUR 40 million-EUR 50 million revenues on the issued banking project in 2030. I was wondering if you can give us some shorter, let's say, targets for 2026 and 2027. How much will be the contribution in 2026 and 2027? The second one is on the contribution. Again on the issued banking, you are targeting EUR 3 billion-EUR 3.5 billion of deposits, right? With 200 basis points of NIM you are having today, I am not getting to the EUR 40 million-EUR 50 million overall contribution. Is there a split with Alleanza on or am I missing something here? Thank you.
Thank you. Gianluca. Let's say that we do expect to reach a sort of steady growth in the Alleanza business in the second part of next year. You will see a phase in. It's reasonable to think that for each year we will gain 1 percentage point view of the potentiality of the market for the next year. They said that there is the phase in, so it will be a little bit less. We already started and we start seeing some positive numbers already now. We are piloting it, so it will take no more than six months to achieve the speed. You can more or less spread these numbers in the next five years with a phase in the first half of next year.
In terms of margins, to say that when we mention banking products, you have to consider that part of these assets are current account, a part are accounting asset under custody. So as a conservative assumption, we estimate margins of around 80 basis points for that part of the business. Thank you.
Okay, thank you.
Next question is from Luigi de Bellis Equita SIM.
Hi, good afternoon. Three questions for me. The first one on Intermonte. Could you elaborate a little bit more on the main synergies expected from the integration? In particular regarding assets under custody and traded products? Are there already some synergies realized in 2025? Regarding the SMEs, are there specific new services or products that you plan to launch for these client segments? The second question on the insured banking with Alleanza. EUR 7 billion-EUR 8.5 billion in volumes by 2030. Very interesting opportunity. What are the main challenges you foresee in reaching these targets? Even in this case, are there early signs of cross selling effects between banking and insurance products? The last question on the market environment, the recent M&A activity in the sector.
How do you see Banca Generali's positioning evolving in the Italian private banking landscape over the next few years? Thank you.
Thank you. So, Intermonte synergies. Let's say that all the business of structured products will be impacted positively. We estimate a run rate of structured products of around EUR 1.5 billion per year. Primary market 80%, secondary market 20%. And we can internalize a good part of these structured products for the derivative components thanks to Intermonte. This is the major synergies that I can see and then some efficiency also in the negotiation of ETF and equity. Yes, we start seeing some synergies already now. We started with the first EUR 50 million structured products in these weeks and the initiatives are very successful. We start seeing some revenue synergies on, say, the capital market part as soon as the fourth quarter you are the phase in. We will reach the run rate probably in Q2 of next year.
We have some implementations and technological implementation to reach the run rate. In terms of Alleanza, I consider that we launched the pilot a couple of weeks ago. Probably too early to see the results. I can see that the communication was great, we organized convention and my perception was a great enthusiasm. Just because, I mean, it's pretty normal to think of cross selling and synergies between Banca Generali and Alleanza, some good practice. Consider for example the successful case of the financial planner of agencies. You know, we have this dedicated network in the agency of Generali. We almost doubled the numbers in the last few years. This is an example of collaboration that is working pretty well and I'm pretty sure that we can accelerate it in the future. There is positive momentum for banking. Also as a defensive move.
If you consider the announcement of the major banks are all about bancassurance. You have to protect your existing business. The first step to protect is to manage the current account. I'm confident that it will be a priority also for the distribution channel for the niche professional. There is the same interest in understanding and speeding up this kind of project. It will be positive for Alleanza, a diversification of revenues, a higher penetration in the share of world of very client, and for Banca Generali leveraging a third party distribution to enter the affluent market. I do not see honestly challenges. I'm very confident.
Thank you.
Next question is from Marco Nicolai Jefferies.
Good afternoon. First question on NII. If I understood correctly, 2026 is going to be stable. I was just wondering if you give us, if you can give us a bit of the drivers here because with some deposit growth you should actually increase your NII compared to 2025. What am I missing there? Another question on the Intermonte synergies, I see in this slide you mentioned EUR 10 million-EUR 15 million by 2026. I was wondering, you know, how much of them you expect by, say, 2027 or 2028. Another question is on the IRAP tax base. If I look at your profit before tax, how much of it would enter into the IRAP tax base? Obviously, my question is linked to the proposal of additional tax on banks by the Italian government. Thank you.
Thank you. Marco. Just to complete the answer for Luigi. So Luigi missed a couple of questions. Cross selling for SME new services. Let's say that the 130 meetings were about M&A, capital market, and debt capital market. So bread and butter for investment bank for us is a blue ocean. Because the first time that we offer these kind of services, so nothing new that is consistent with the proposition and capabilities of Intermonte. M&A scenario. Let's say that we are very focused on internal growth thanks to Intermonte and Alleanza and all the innovation in the core business. I'm sure that we don't need many activity to grow and let's see if we can accelerate in the insurer banking business. Moving on to Marco. Marco, as usual, you know, we apply a conservative approach.
In our projection there is a slight expansion of the deposit, a slight reduction of the net interest income. Let's say that we are in the order of 5%. So 5% of expansion of the asset, 5% of reduction of net interest income of the margin and you have stable contribution. Again, we will see if we can be more positive on the decline deposit. The second question was about Iraq. Tom, I will hand over to Tom Di Russo . Thank you.
Gian Maria. Let's say that we expect that the impact of the 2% on IRAP will account for EUR 6 million-EUR 7 million per year. It is not a dramatic progress for our P&L. You have to consider on the other side that we have the benefit on the dividend, which is probably around EUR 6 million per year. The two things are mainly net impact, really negligible in our P&L, around EUR 1 million, you can estimate between EUR 1 million and EUR 2 million.
Thank you. Instead, on the Intermonte synergies, like how many, how much of them we can expect by, say, 2027 or 2028.
I will suggest a linear projection. Okay, I'm sure to accelerate, but we say that a proportion, a linear projection, it will work in my opinion. Thanks.
Just a quick follow-up on the NII. Can you remind us in your portfolio, what are the bonds that you own maturing and the rate of these maturities in 2027 and 2028? Thank you. If you have. Thank you.
Yes, we have.
Seen an average maturity.
Of the portfolio, which is around less than four years. starting from this data point, you have to assume that every year we have around 2026, for example, we have more than EUR 3 billion of bonds that are going to expire and, let's say, a couple of billion in the next year. We are very diversified from this point of view. Also, the duration is still in the range of 1.4. This is the profile that we have today. Consider that the split of the portfolio is around 60% fixed rate and 40% on floating rate.
Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. Mr. Mossa. There are no more questions registered at this time.
Okay, so just to say thank you for having participated to our conference call. Hope to see you soon.