Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Banca Generali first quarter 2026 results conference call. As a reminder, all participants are in listen-only mode, and 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 0 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, welcome to our first quarter results conference call. As usual, let's start with a quick introduction. The year started very well with both strong financial and commercial results. In particular, net profit was well supported by both recurring and variable components. The commercial results were very, very strong, thanks to an extraordinary job of the existing sales force. Probably more, even more important, the two major initiatives of the bank, Insur Banking and Intermonte, are going in line or above the expectation. In particular, Intermonte closed the first quarter of the year with increase of 40% of the result and EUR 3 million of revenues driven by synergies.
Today is, we'll take the opportunity also to give you an update on ETF and present Investlinx, as we are at the final phase in the acquisition of this small but strategic asset management in Ireland. As usual, let's start by numbers at Page 4 with net profit. Overall net profit close to EUR 126 million. As I said, thanks to a strong contribution of recurring, record high, EUR 93.5 million or 80% higher year-on-year, and also variable net profit contributed positively, thanks to variable fees linked to the market with a contribution of EUR 33 million to the total result. The net profit result is driven by most, all the revenues stream, in particular net financial income, Page 5.
You can see the overall net financial income at almost EUR 90 million, stable quarter-on-quarter and 4% higher year-on-year. This increase year-on-year is driven by solid net interest income, EUR 82.7 million or an increase of 4% year-on-year and solid trading gains, EUR 9.2 or plus 6.6% year-on-year. You can see also the total net interest margin slightly higher at 2.02%, we will comment the reason in the section linked to the balance sheet. Now let's go through the total gross fees. Page 6. The overall gross recurring fees closed above EUR 300 million, first time ever, with an increase of 8% year-on-year, and the variable fees contribute positively for EUR 46.6.
Even more important, we have more than EUR 13 billion of our Luxembourg assets close or in line with the high-water mark level. We do expect other positive contribution from performance fee in these weeks. Moving on to the different components of gross recurring fees, Page 7. We start as usual with the representation of the investment fees, higher management fees, 242, higher advisory fees, 256, with stable margins. You can see margin on management fees at 1.43. Here you have a positive seasonality, seasonal effect due to less accounting days. As I said that the overall margin are stable, it's all about a business of asset expansion. Page 8.
Here we can see also the positive contribution of other fees, almost EUR 45 million or 17% higher year-on-year, with stable contribution of banking fees, strong results in trading, brokerage commission, almost EUR 22 million, and strong results from entry fees, in particular structured products at EUR 16.2 million. Positive news from the recurring component and positive news from cost components. If you go to Page 9, we can start from payout ratio. Everything is in line with our projection. You see a slight decline in the fees spent on net interest income, just slightly above EUR 2 million in the quarter. Ordinary payout, close to 36%. Cost of growth below 11%, and payout to third parties, just slightly below 6%.
Here the confirmation how important is to manage and to steer the network and to control the payout ratio. Page 10, you have a new representation of operating costs. We simplified the representation, and we restated the historical series to include Intermonte. You see that the first quarter of this year closed slightly above the guidance 68%, so 82.5 or 8 + 8.3, which is basically driven by an acceleration of all major strategic projects. The investment linked to future growth. Bottom, you see non-recurring items is a stabilization as communicated in the previous conference call at EUR 2.2 million. The sales personnel cost slightly increased to the linked to the hiring of the bankers from BG.
As a result, Page 11, we see the level of operating costs on total assets at the lower level at 0.28, and we see a reduction also in the cost-to-income ratio adjusted by the volatile components and adjusted by Intermonte. Now we are below 36%, and we do expect to see further reduction. Just to close this first part of the presentation, very strong operating profits, also excluding the performance fee, and this is driven by strong net recurring fees, double-digit growth, and I'm very positive also in for this trend in the second quarter. If we focus on total non-operating charges, you see a decrease to EUR 18 million, mainly thanks to a lower provision.
As I said, very strong recurring net profit at EUR 94 million, despite also including the negative effect of the temporary tax measures introduced by the budget law. A quick comment on tax rate, in line with our range, within 0.6%-0.7%. Let's move on the balance sheet part of the presentation. Page 14, you see a slight increase in total deposit from EUR 15.8-EUR 16.2. A slight decline, reduction in the cost of funding from 0.72%-0.68%. This is linked to the fact that in the first quarter, we haven't launched any specific commercial initiatives. If we see Page 15, you see the slight increase in interest-bearing assets, EUR 16.7-EUR 17.2.
Here you see a slight increase of the yield on interest-bearing assets from 2.68 to 2.7. A slight increase in the yield on the bearing assets and a slight decrease on the cost of funding implies the net interest margin at 2.02. Page 16, capital and liquidity ratio. You see total capital ratio and leverage ratio well above their regulatory level, and also, including a payout in line with the past year, so at 85%. Liquidity and coverage ratio, net stable funding ratio, pretty stable. The first one above 300% and the second above 200%. Let's move on, let's focus on the third part of this presentation.
Here, we changed the presentation just to give you more disclosure on the Insur Banking business and a different view on the managed solution assets. Let's start from Page 18. This is a new representation, as I mentioned, where, first of all, we represent on one end, the total assets of BG clients, and on the other, the total assets Insur Banking of Generali clients. Second, we present both the numbers at the end of the first quarter, as well as an update at the end of April. Looking at numbers, you see a significant recovery of both assets, BG assets and Generali Insur Banking assets. In particular, BG total assets increased to EUR 116.7 billion, higher than level ever.
The overall total assets in Insur Banking with Generali is at EUR 7.5 billion. If you focus on the right part of the presentation, the different comment, bottom, you see an update also of the business with Alleanza Insur Banking. It is in line or slightly above expectation. You know, we have two different components of this partnership. The first one is about an insurance wrapper distributed directly by Alleanza and managed by Banca Generali. Here, since inception, the overall gross premium are at EUR 170 million, of which 40% already invested in unit-linked, and another 40% will be invested gradually in the next 3, 4 years. Overall asset allocation will be 20% traditional life insurance and 80% unit-linked managed by Banca Generali.
This is distributed by 2,700 private advisors by Alleanza. As you know, the second part of the project, banking the client, started with a pilot last part of the year. We consolidate all the digital procedure and processes. Great feedback from the pilot phase, starting the rollout. The rollout started in February. We have already opened more than 1,700 current accounts. The feedback are very positive. Here I do see the feedback very coherent with the strategy from both the managers on the network as well as the private advisors. As I mentioned in different moments, is not if, but is when, is about training courses and communication.
The feedback, again, are very, very positive and strong. There is a strong commitment by everybody. Very positive news from the Insur Banking, but now let's focus on our core business with Banca Generali clients. Let's move on to Page 19. Also in this case, you see a new representation. On the left side, you see the overall assets, EUR 116.7 billion, and the overall contribution of assets under advanced advisory. Here you include both assets under custody and asset management products. You see that we are at 10.8% of total assets. On the right you see the breakdown of the BG total assets by fee categories. The assets under investment include of course, the assets under custody and banking under advisory, the traditional life insurance, and the managed solution.
Managed solution account for almost EUR 54 billion. We see stable traditional life insurance. Traditional life insurance accounts for more or less 20% of assets under investment. You see the components of the advanced advisory services invested in assets under custody at EUR 7.7 billion. That is a new record high. Next page, there is a deep dive of managed solutions. The deep dive of the EUR 53.9 billion at the end of April. Here you see a focus on the so-called in-house product. In-house product is about the in-house fund, so Luxembourg funds distributed at the retail level, EUR 13.6 billion, and then the financial wrappers at EUR 14.8.
If you compare the level at the end of April to EUR 8.4 billion to the first quarter of last year, EUR 24.2 billion, you see a significant acceleration in the allocation of in-house products. You have a focus, the gray part, the lighter one, third party fund, EUR 12.9 billion. Finally, but not less important, the insurance wrappers. I'm very confident to see an acceleration of in-house products just because we are very close to the launch of a very innovative solutions, and the same can be said for the insurance wrappers. In the next weeks, I do expect significant contribution from managed solution compared to historical levels. Page 21. Let's go through the net inflows.
In this case, there is first representation of the first quarter and then a focus on the April numbers. Let's start by Page 21. Page 21, we see the traditional representation of the total net inflows in terms of three categories. We see EUR 700 million in asset under investment and an overall contribution of net inflows at EUR 1.9 billion. That is the highest level ever achieved by the bank. You see a stable contribution of in-house products on the right. Next Page 22, there is the representation of first quarter results by acquisition channel. Here you see the amazing job of the existing network, EUR 1.4 billion, and the constant contribution of net recruitment.
In terms of numbers, 60 new financial advisors with an acceleration of young talent FA to support the creation of new teams and the succession planning of the eldest financial advisors. Page 23, there is a focus on the April numbers. Again, here the acceleration is very, very strong, almost EUR 900 million. Even once included a one-off inheritance claim of a non-Generali insurance policy for a total amount of EUR 150 million. Including also this EUR 150 million of a very poor insurance policy, we achieved the best April ever. You see that the asset under investment account for EUR 0.4 billion.
If we look at the net inflows by acquisition channel, here you see an acceleration of both existing sales force, 0.7, and recruitment. I have to say that I never experienced in my life such enthusiasm for recruitment. We have several meetings, I think that we will give you a very, very positive news in the coming months. Now, let's enter the last part of the presentation, the business update and closing remark. As I mentioned before, this is an opportunity to present Investlinx. Investlinx is a very young asset management company. Was founded in 2021. Is an independent asset manager, is based in Ireland, at the moment is focused mainly on active managed ETF.
Is regulated by, of course, the Central Bank of Ireland and more important, is being authorized to manage on one end, active ETF, on the other, also UCITS fund and discretionary mandates. The positive news in this case is that despite its short operating history, we already completed the startup phase, and we already achieved the break-even phase. If you look at the current area of activity, two active ETF. The first one is mainly equity, bottom- up approach, and the second one is a balanced solution. Why is so important for us, Investlinx, for the sustainability of the bank, for the acceleration of results?
First of all, just because we have acquired a turnkey platform with a very limited execution risk, now we have two platforms of asset management, the first one in Luxembourg and the second in Ireland. This give us a great flexibility. We have an established Irish manufacturing hub ready to distribute both active ETF and fund, complementary to our Luxembourg offer. Last but not least, we work actively with ETFs. If you go to Page 27, you see stocks and volumes. As of today, we have more than EUR 8.2 billion of ETFs as underlying of financial insurance wrappers, as underlying of funds, as well as underlying of advanced advisory services. ETF, considering just assets under custody account for more or less 9%.
If you look at the bottom of the page, you see that the traded volumes average over the last two years, including Banca Generali and as well as Intermonte, we are about EUR 40 billion. Of course, part of the story is to internalize the value, part of the value chain in active ETF roadmap. We are at the signing moment in these days. We do expect the closing at the end of June, at the beginning of July, and we are almost ready to launch the first initiative. The distribution channels will be mainly two: direct distribution channels to our clients and to institutional clients through Intermonte, and direct distribution as underlying of our financial and insurance wrappers. Let's say that Invest Links has two major goals. The first one, to give more flexibility to our international asset management platform.
On the other end, to integrate, internalize part of the value chain re-referred to the ETF business. Page 29 and 30, we show the targets we already shared with you in the previous conference call. We have just give an update to the net interest income at Page 30, in the range EUR 335 million-EUR 345 million. We increased the range by EUR 5 million due to the slight increase in the yield curve. Now we are ready to hand over and to answer to all the questions. Thank you.
Thank you. This is the Chorus Call 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 touch-tone 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. First question is from Giovanni Razzoli, Deutsche Bank.
Good afternoon to everybody. Thank you for taking my questions. I have three, actually. The first one is on the acquisition of the Investlinx. The rationale in my view is very clear, and it's very interesting deal. I think it will complement your product suite for your very, you know, sophisticated client base. That is very clear. I would expect that some pushback on the market could be okay, but it is the higher penetration of active ETF may cannibalize the margin on your existing product mix, which I don't think is the case, but I would like to know what's your response to this potential pushback on the market. Second question.
You had EUR 170 million of product placement out of the insurance agreement with Generali Alleanza, which in my view is a very, very strong number. Is it fair to compare this amount with the EUR 0.7 billion of asset under management, asset under investment inflows in the Q1, and more specifically, to compare it with the EUR 0.1 billion of insurance wrappers inflows that you had in the Q1? If that is the case, this amount of inflows from the Insur Banking agreement is extremely good in my view. The last question is another positive element in my view, is that you seem to have resumed to a very healthy trajectory in terms of recruits. We know that for Banca Generali, recruits of bankers is a key component of the growth strategy.
I've seen that the Q1, by the way, the recruits were concentrated on junior resources when compared with the past. I would ask you to clarify if this is a change of strategy, if it's a temporary trend, and what is the pipeline for future recruits over the next couple of months, and what is the profile? Thank you.
Thank you, Giovanni. First of all, the answer on the risk of cannibalization of ETF. To say that we are working very well with ETF, always are more often used as the underlying of financial insurance wrappers to minimize the total expense ratio to the client. In some cases, used also by our top bankers as underlying of advanced advisory services. If you combine the fees of the advanced advisory services, part of the internalization of margin of ETF and the brokerage fees, you would have an excellent margin. I do not see risk of cannibalization, especially because we will focus on niche strategies and replacement of stocks in more common ETF. Second, the inflows. You are right.
EUR 170 million of gross inflows provided by Alleanza is a big number, especially if you consider the volatility of the market and the geopolitical chaos in this moment. The enthusiasm of the network is very high, is very strong, and there is a strong commitment. I do believe that we will see positive surprise in the medium long term, just because the private advisors of Alleanza, we see the opportunity to increase, elevate the degree of professional and to cover also other parts of the portfolio of the client. This is very positive. If you compare the numbers of Alleanza with internal numbers.
The number of Banca Generali, in the numbers of Banca Generali, in terms of insurance wrappers, were pretty low just because we are expecting the launch of the new platform and the launch should be next week. I think that we're gonna see positive numbers as soon as May. Third, on recruitment, I'm very positive. I am very positive as I met several very senior bankers. Thanks to the acquisition of Intermonte, now we are able to attract very senior bankers with important entrepreneurs as clients. And I do see some of these conversation very close to have an happy end and to join the bank.
You say that monthly data are normally some, we say, volatile, but the overall numbers of meetings and of interest from these meetings is at the highest level ever. I think that you will see both an increase in numbers as well as an increase of assets. The focus on young talent is as important as the focus on the most senior one for the sustainability of the network. It's very important to see the blue part of the bar increasing over time. Thank you.
Sorry, one clarification, Gian Maria. You mentioned that in May you launch a new platform. I missed the comment here. What are the details of it?
We are launching an insurance, a new version of our insurance wrappers for our clients. The focus will be again also in BG, not only in managed solution, in-house managed solutions, but also on the insurance wrapper. Just to say that in the bank, they say that the inflows of the insurance are driven by new release of products and the new release of platforms. While for Alleanza is a blue ocean, as is the first time ever they can present financial wrappers with an insurance wrapper. First time ever, plenty of clients, great enthusiasm. This is no-brainer for Alleanza. For Banca Generali is driven by innovation products. Thank you.
Thank you.
Next question is from Gianluca Ferrari, Mediobanca.
Yes. Hi, good afternoon. A follow-up, Gian Maria, on Investlinx, on the questions asked by Giovanni. You said Investlinx will be mainly used for niche strategies, but looking at the simple P&L you provided, I think there are very little number of employees, fund managers or analysts. I was wondering who is providing the brain behind these new strategies you want to put out? How scalable is Investlinx given the current structure? Linked to the margins question from Giovanni, those active ETFs are probably priced in the 0.8, 0.9 percentage points ballpark in terms of management fee. This is the underlying and advisory fee contract that, if I'm not mistaken, should be priced 0.5.
Is it fair to say that it is still in the 1.3, 1.4% ballpark, the overall gross margin of these products, and under wrappers it's even more than that? The last one is a kind of curiosity. On the one-off claim, the EUR 150 million, what does it mean non-Generali insurance policy? I suppose that all the Ramo Primo were GNA savings of Generali. I don't understand what does it mean. Thank you.
Thank you, Gianluca. Starting from the end. Is old international insurance policy. Few years ago we used to work with Utmost, then Generali decided to sell it, and so we have still a runoff portfolio, and this was the major position.
What is the impact in terms of revenues? You said very little. I presume it's kind of 10 basis points.
2 basis points. 2 basis points.
Okay. Okay. Thanks.
2 basis points. The second, we say that I'm confident to retain part of these outflows.
Okay.
We're gonna see from the next months. Second, margins, let's say that the profitability, the margins of ETF will be in the range of 0.5-0.9, depending on the kind. You can have active index to replace passive funds, and you can have niche initiatives. You can think in the range 0.5-0.9, depending on the underlying. You are right, that will be combined with advanced advisory fees, brokerage fees and wrappers fees. The brain. The brain is partly in Italy, Intermonte, Banca Generali, is partly in Luxembourg, for example, on our BG Fund Management. If you think of our major competitors, for example, the biggest one, provide solutions from Ireland and great capabilities are in Luxembourg.
You can also leverage on existing brain. The platform is fully digital, is, of course, no legacy and is fully scalable. No reason to have any limits in terms of assets.
Very clear.
We will give some disclosure numbers during the presentation of the next three-year strategic plan at the end of the second half of the year.
Thanks a lot.
Next question is from Elena Perini, Intesa Sanpaolo.
Yes. Good afternoon, thank you for taking my questions. I have essentially one, as the other ones have been previously answered. My question is focused on your operating costs. You say that you are investing a lot in IT and also AI initiatives and also on the growth of your machine. When do you think that we can see the first tangible benefits of those investments in two years' time, for example? Thank you.
Thank you, Elena. Let's say that you are right. Part of this costs are to support the IT, let's say innovation and development, part to set up the Insur Banking Intermonte business. Let's say that part of this costs are already generating positive influence thanks to the collaboration with Intermonte and Banca Generali, and parts are to support the Insur Banking business with Alleanza. From AI perspective, so more efficiencies in the processes, we do expect to stay still on the upper part of the band 6%-8% for this year, and I do expect a normalization for next year. Thank you.
Next question is from Luigi Tramontana, Kepler Cheuvreux.
Yes, good afternoon. Thanks for the presentation and taking my questions. The first one is on your guidance regarding the net inflows for this year, which looks increasingly prudent. Is there any element that you can give us to explain this prudence, or should we expect that you are going to outperform in terms of net inflows this year? Regarding the recruitment, I understood from your comments that the integration of the investment banking services in your offering allows you to attract more senior bankers. Can you give us an idea regarding those recruitments, if they relate to the broader market or from a competitor in particular, a competitor that tried to buy Banca Generali last year but failed? Thank you.
Thank you, Luigi, and thank you for not mentioning the name. Let's say that in terms of net inflows, of course, you are right. The message is pretty clear and pretty positive. At the moment we decided to maintain the same guidance in order to see the next quarter, and then to say just once the number. You are right. I mean, in a normal context, and without the headwinds over the last year, of course it's right to consider the targets as conservative. In terms of recruitment, we didn't record that significant recruitment by the player you were mentioning.
First of all, as they are mainly employees, it's difficult to convert important numbers of employees in paid agents, so financial advisors. It's not from that player, or just partly from that player, but it's from, let's say, both traditional private banking system as well as some FA network where you have bankers with important portfolios willing to upgrade the offer and providing also Alternative services to the entrepreneurs. It's about the high-quality bankers and high-quality financial advisors. Thank you.
Very clear. Thank you.
Next question is from Marco Nicolai, Jefferies.
Good afternoon. Just a curiosity from my side. I've seen that you guide for half a billion, EUR 1 billion of deposit inflows this year. I mean, also this one looks a relatively conservative number in a light that in April only, you basically did half a billion of liquidity inflows, deposit inflows. So, I was wondering if you can give us some color on this number. Also, what is the role of Alleanza in this number for this year, also in light of the fact that you already opened 1,700 new current accounts under that partnership. Thank you.
Thank you. You are right. In the first four months, we had significant inflows in the current account, but part of these are for, let's say, is a sort of parking, waiting for the new initiatives. Partly will be reinvested in these new solutions, and this explains why I'm more confident than in the past to see in the next weeks, strong numbers in managed solutions. Of course, in a normal market condition. At the moment, let's say that Alleanza is not included in these numbers. I try to explain why. As I mentioned, the Alleanza clients are affluent clients. The average amount per policy is around EUR 25,000, EUR 30,000. EUR 25,000-30,000. The average of the current account is around EUR 5,000.
EUR 5,000-10,000. It takes from three to six months to really onboard the client as a main bank, it will take time. The deployment on the, let's say on the banking activity started in February, it will finish at the end of July. The insurance wrapper is on top of the numbers, the profitability for us is about the underlying. We manage the underlying of these insurance wrappers, you will see these numbers in the institutional share classes of our Luxembourg platform. Are in the Insur Banking bar, the first page of the presentation for total assets in that part. I think that you will start see some impact in the second half of the year when you gain momentum.
We will inform and give disclosure of these numbers with the representation that we presented today. Let's say that only the current account and asset and the custody part will impacted on the overall assets of the bank, just because you open up a current account with the bank. So, that part will be in these numbers, but the impact estimated for this year is negligible, is pretty low, and due to the fact that we are in the ramp-up phase.
Thank you.
Mr. Mossa, there are no more questions registered at this time.
Okay. Thank you very much for participating to our conference call and have a good day.