Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Banca Generali nine-month 2026 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 0 on their telephone. At this time, I would like to turn the conference over to Mr. Gian Maria Mossa, CEO and the General Manager of Banca Generali. Please go ahead, sir.
Good afternoon, and welcome to our nine-month conference call. As usual, today, we are going to go through the main results and achievements of the first nine months, very, very strong results, and a record high on financial and commercial targets, as well as we dedicate some time in giving you an update on our key strategic priorities. As usual, let's start from net profit, so page four. First nine months at EUR 384 million, with a very strong contribution of the recurring net profit, above EUR 300 million, and also with the variable component that doubled the result of last year. Focusing on Q3, overall contribution net profit at 105, with more than 100 coming from the recurrent component. Page five, let's go through the net financial income. Overall result, first nine months, above EUR 280 million. We continue to see a very solid net interest income with ongoing improvement.
We closed the third quarter at EUR 87 million, and with a positive contribution of the trading gains and others, thanks to the integration with Intermonte. The overall contribution of Intermonte since the beginning of the year amounted EUR 16 million. In terms of total net interest margin, you see a gradual recovery. Now we are at 199 basis points. Moving on to the total gross fees. Total gross fee closed at EUR 1 billion and 84 million, thanks to a double-digit growth in gross recurring fees, and as we already said, a significant contribution of variable fees. Focusing on the result of the third quarter, overall EUR 322 million, with an increase of 14% from the same period of last year. This is driven by all major components, revenue components. Page seven, we can see the investment fees. We closed the first nine months above EUR 800 million.
This is driven by both asset aspiring from any slight increase in the margins. In particular, if we focus on the third quarter, you can see double-digit growth in both components, management fees and advisory fees. Focusing on the margins, bottom of the page, you see an acceleration in overall margins of the management fees. Part is due to one-off in insurance items, part due to a better mix in favor of in-house products. Page eight is not only about an acceleration of investment fees, also other fees are contributing significantly to the growth of revenues. Overall, other fees closed at EUR 134 million, with positive contribution of all major components. If we focus on the third quarter, you know there is some seasonality, but results compared to the same period of last year are very strong. Entry fees almost up 25%.
Brokerage commission, a higher double-digit growth, then you see also a small increase in the banking fees after the phasing of the new pricing for current account. Moving on the cost side, page nine, starting from payout ratio. Here, all the ratios are in line or better than expected. Payout ratio to FAs, the ordinary component is below 36%. The cost of growth is below 11%. Then, as you see, the payout to third parties for the third quarter is in line with expectation at 6%. On the operating cost side, so page 10, you see an increase of 8.2% of the core operating cost. It is slightly higher than our guidance. This is driven mainly by the acceleration in IT and AI investments, while the core is in line with expectation. If we focus on the non-recurring components, we have seen some one-off.
Some M&A scouting, the cost for the acquisition of Investlinx, then, of course, all the initiatives linked to our Insurbanking business. If we move on page 11, we can see that, like for like, all the operating ratios are at all-time lows. That is a way to see how good is our operating leverage. In particular, operating cost out of total assets at 0.27 and the adjusted cost income, excluding Intermonte, at 34.3%. Let's move on page 12. As usual, our short presentation of our P&L. Very satisfied with our increase in the operating profit, excluding performance fee, with an increase of 14% year- on- year. If we focus on the non-operating charges, here you see some improvements, as we communicated during the previous conference call. Part of this improvement is also driven by some benefit from higher discount rate on acquired provision.
Overall net profit close at EUR 384 million, and here you know there is an additional tax charge in Luxembourg of EUR 26 million. As we already said in the previous conference call, we are confident to absorb this increase in the tax rate before the end of 2028, and probably we can have positive news also before that date. Consider that, of course, all the consideration here of the tax rate exclude the current discussion in the Italian Parliament for the new Budget Law. To sum up, we are very happy with these financial results. All the revenue components are doing very well, and there is still room to further improve, as the commercial activity is very solid.
Before moving on the commercial activity, to work on the balance sheet and capital ratios, also on this side, there is, let's say, numbers are pretty in line with the numbers of the second quarter, so we will go quick on these pages. Page 14, you see the total liabilities and equities, 18.8, with a total deposit at 16.2, so in line with Q2. The cost of funding is slightly higher, 0.89, and same line with the market rate dynamics. On the total assets and in the interest-bearing assets side, so page 15, you see that the overall interest-bearing assets are flat quarter on quarter, EUR 17.1 billion, with a switch. So financial assets half billion higher, loans to banks and other assets half billion lower.
In this case, you see that the interest, the yield on interest-bearing assets increase and increase more than the cost of deposit, and this explains the normalization of net interest margin. In terms of capital liquidity ratio, all good news, with all the ratios in line or above last year. Total capital ratio 19%, leverage ratio at 5.8, and then liquidity coverage ratio and net stable funding ratio well beyond the, above the SREP requirement. Now, let's enter in the part referring the commercial activity. Page 18, we start with total assets. This is the new presentation we introduced a few quarters ago. You see that the overall assets of the bank amount almost at EUR 130 billion, of which 7.7 referring to the [aggregate] products, so mainly unit-linked within Generali Group, including also Alleanza activity, of course.
You see for the first time the contribution of Alleanza to the results in terms of current accounts and assets under custody, almost EUR 100 million, and then the total assets of BG clients, 121.8. Let's focus on the total assets of BG, so page 19, to representation in terms of contracts, in terms of fee categories. In terms of contracts, you see the positive trend in assets under advisory. Now they account for 11% of the total assets. You see this still increase, while in terms of assets by fee categories, we exceeded for the first time EUR 80 billion in assets under investment. Of course, the most profitable part of the assets under investment is the managed solution. It's about the managed solution. So let's focus on managed solution, page 20. Here you see the significant acceleration in contribution of in-house products.
Moving from 25.8 up to EUR 30.1 billion. This is thanks to the excellent job of both our Luxembourg portfolio manager as well as the portfolio manager of financial partners. In terms of inflows, first of all, let's focus on the first nine months and then a comment on October. First nine months, page 21. Here is pretty clear the significant acceleration compared to last year, both in terms of total net inflows and in terms of quality of net inflows, with assets under investment close to EUR 3 billion. In terms of managed solution, also in this case you see the acceleration year-on-year. Probably even more interesting, page 22, where we analyze, we consider the net inflows in terms of acquisition channel.
You see the increasing productivity of the existing sales force from 3.5 to 4.7, and also the significant acceleration in recruitment activity from 0.9 to 1.6, and this is driven by higher recruitment in all major components. So, higher recruitment of young talent, higher recruitment of bankers from traditional banks or private banking structure, as well as acceleration in recruitment of financial advisors. More will come in the next weeks. Page 23, there is an update of these numbers, including October. October was probably the best October ever, with inflows above EUR 800 million and inflows in assets under investment above half billion. So, the overall result in the first 10 months of this year exceeded EUR 7 billion in terms of total net inflows and EUR 3.4 billion in terms of assets under investment.
Now, let's move on to the last part of the presentation, where we want to give you an update on the key drivers, key strategic drivers for our future growth. We have three major areas, as I was mentioning. The first one is how to enhance and invest in strengthening the productivity of the core business of the existing sales force. The second is about how to expand the addressable market, thanks to Alleanza and thanks to Intermonte. Last but not least, how to increase the share of the value chain, so how to internalize margins. Let's start from page 26, the first lever. So, how accelerating the productivity of the existing sales force. First of all, on the left, you see some graph where we compare our productivity with the productivity of the overall industry. Here, the overall industry is represented by Assoreti.
Assoreti is the association of financial advisors in Italy. On the top of the page, you see the overall percentage contribution of Banca Generali to the overall net inflows of the industry, and you see an acceleration year-on-year. Now we account for more than 12% compared to the 10% of the last year. So, our growth in terms of inflows is not just in absolute terms, but it is also in relative terms compared to the market. This is even more evident and clear in the second graph, where we measure the ratio between the total net inflows on the total assets at the beginning of the period. Last year, the overall industry grew at 6.1%, while we were lagging these numbers, we were at 5.6, and this was basically driven by the uncertainty linked to the bid of Mediobanca.
If we see the numbers of this year, despite the bid from Monte dei Paschi, we are exceeding not only the contribution of last year, but also the overall ratio of the industry. So, overall inflows for Banca Generali on the total assets at the beginning of the year, 7.5% compared to the 6.8 of Assoreti. So, higher inflows, higher the contribution in relative terms to the overall industry, and then also a healthier financial advisory network. Healthier in terms of loyalties. If you look at the churn rate of Banca Generali for this year, it is below 1%. If we compare the consistency of the financial advisory network in terms of increase, percentage increase, you see that last year we were lagging the industry, and this year we are overperforming.
The consistency of the network increased by 4.1% in the first nine months compared to 3.5 of the overall industry. Why we are so confident to maintain this leadership and to accelerate in the gap compared to the industry? Two major reason. The first one, we are investing significantly in the quality of the financial advisory network and the quality of our offering, and we are very visible to the market and well-recognized in terms of our leadership in the wealth management. We received several awards as the best place to be for clients, the best private banking structure, the best wealth management in terms of services for entrepreneurs. This is very supporting in terms of quality of the overall offering.
On top of that, we have just released our first proprietary AI tool, an AI system to enhance productivity for our financial advisors, of course, fully integrated with the FAs' platform. We will see in the next months also the positive effect in terms of contribution of this first implementation of AI supporting the day-by-day business of our financial advisors. First lever, how to enhance productivity of the existing sales force and accelerate compared to the industry as a whole. Second lever, how to expand the target market, page 27. Here you have an update of Alleanza numbers and Intermonte numbers in terms of target markets and target clients. Starting from Alleanza, here you have an update of numbers at the end of October. Total insurance wrappers exceeded EUR 400 million, with a contribution of October at EUR 55 million.
The trough of October is higher than the average of the previous months. The same can be said for the current accounts. Overall, current accounts opened since inception above 13,000. Only in October, we opened more than 2,000 current accounts. Again, higher than the average of the previous months. Of which, of these 13,000 current accounts, almost 70% are actively used. We can consider, say, the first phase of onboarding clients concluded. It means that now is an ongoing activity, and now we can focus all the investments in working for cross-selling and upselling, leveraging also data analytics. Alleanza will allow us to approach also affluent client, while Intermonte is allowing us to expand our footprint on entrepreneurs.
In particular, and I'm always in page 27, right part of the slide, the overall new clients, entrepreneurs, or corporate clients exceeded 4,000 for the year, and these 4,000 contribute for almost 50% of the overall inflows. The importance of the entrepreneur is increasing over time, and again, we are just at the beginning of this new strategic positioning of the bank. Moreover, thanks to Intermonte, we are able to attract and recruit top bankers. Here, the definition of top banker is banker with more than EUR 40 million of target in the first 12 months. We already insert more than 18 new colleagues, end of October, 18. The target of these 18 financial advisors for the first year is in the range EUR 1 billion-EUR 1.2 billion, and projecting the growth rate of these senior bankers in the next three years, the overall contribution would be EUR 1.6 billion-EUR 1.7 billion.
It means EUR 80 million per financial advisors. That is pretty impressive. Also in terms of expanding our targets in terms of clients, affluent on one end and entrepreneurs on the other one, will assure to the bank a new lever of growth. Last but not least, page 28 is about internalizing greater part of the value chain, and here you have again two priorities. One is about investment fees. The acceleration of the penetration of in-house product is pretty impressive. Two years ago, we announced during a conference call the target to increase the percentage of retail distribution of in-house funds towards third-party funds of 1 percentage point per year. If you compare the result in the last two years, we increased by 3.8. It means we doubled the result. Now, the distribution of in-house funds exceeded the distribution of third-party funds and stay at 53.1%.
This is not the target. The target is to exceed in medium term 60%. The same can be said in terms of the overall contribution of in-house products compared to overall managed solution. You see bottom left that now we stand at 53%. This, again, is thanks to the distribution of funds, but also the financial wrappers that are performing very well and where we have a leadership in the Italian market. It is not only internalizing a greater part of the investment fees, but it is also about other recurring fees. Here you have two projects. One is Intermonte. We announced some synergies. We are in line or ahead the expectation. In particular, in the first nine months of this year, we are almost at EUR 10 million synergies, well distributed between structured products and brokerage and advisory.
Moreover, we have just concluded the acquisition of Investlinx, and next year we will increase the penetration of our in-house active ETFs, internalizing greater part of margins also in the ETF space. Just to conclude, page 29, we are close to the end of the year, so we can give more precise numbers for this year. In particular, net inflows, now we are confident to exceed EUR 8 billion, the best year ever for the bank. In terms of mix, we are confident to exceed EUR 4 billion, to stay in the range EUR 4 billion-EUR 4.5 billion. In terms of net interest income, we narrowed the range. Now our projections are in the range of 340-345.
In terms of long-term guidance, starting from cost, we narrowed the range from six to eight to seven to eight, as we want to accelerate on the AI implementation, not only for the support to the financial advisors in terms of operating activities, but also for commercial goals and to better support clients. This will happen next year. Then we want to accelerate insurbanking, as mentioned before. In terms of margin fees, instead, thanks to this process of internalization of margins and improvement of the mix, now we are confident to increase the range of the management fee margin at 1.41-1.43. Let us say that the guidance for the next year will be announced during the conference call on February for the full-year results.
To conclude, we are delighted with the results of the third quarter, very positive for the results of the fourth quarter, very sound commercial activity, and several levers to enhance growth and productivity also for the foreseeable future. Now I will hand over for a Q&A session. 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 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. The first question is from Davide Giuliano, Equita.
Hi, good morning, and thank you for taking my question. I have three. The first one is a comment on the impacts of the banking consolidation. What trend do you expect on recruiting in light of the ongoing bank consolidation, to which another transaction in Northern Italy will likely be added? Have you observed any changes after the BMPS offer lapsed? The second one on margin, we have seen a further improvement in management fee margin to 145 bps in the quarter. Can you comment on the underlying trends you expect going forward in terms of product mix and main products requested by clients? The very last one on business plan, are there any updates on when you plan to present the new business plan? Thank you.
Okay, thank you. Let's say that in terms of banking consolidation, of course, we're going to see some extra spillover from traditional banking system to financial advisory network, and we are very well positioned. Let's say that I'm very impressed by the numbers of conversation with very senior bankers. I think that in next 12, 18 months, we will see an acceleration of numbers, and partly, driven by a very unique proposition also with Intermonte. In terms of margins, let's say that we see higher interest in personalized solutions, financial wrappers, insurance wrappers, dedicated funds for a cluster of clients. Personalization matter a lot, and all the personalization is driven by in-house solutions. This is very helpful also for margin.
In terms of business plan, let's say that on one hand, now we know what we want to do to accelerate growth in the next years. Today, we have given an update on the three levers. To these three levers, there are numbers, and we are considering to update these numbers next year, and we are considering the opportunity to launch our new business plan in the same period of Generali. Let's wait for Generali, and probably will be in the second part of next year. Probably in February, we will give some more disclosure on Investlinx and other initiatives where we do not have disclosure of numbers, but the overall business plan could be aligned with the time framework of Generali. Thank you.
Thank you.
The next question. As a reminder, if you wish to register for a question, please press star and one on your telephone. Once again, if you wish to register for a question, please press star and one on your telephone. The next question is from Marco Nicolai, Jefferies.
Yeah, good afternoon. First question on NII. What do you expect for 2027? I know you just mentioned that essentially you will give us guidance for 2027 in a few months. However, most of your competitors are out with some at least rough guidance on 2027 NII, so if you can give us an idea. It is the first question. Second question, do you see any impacts from the savings and investment accounts? In general from the push for the Savings and Investments Union we are seeing at European level. Then third question, if you can give us the market share you had on the BTP Valore issuance, and if you can explain the strength in asset under investments inflows in October.
Thank you. In terms of net interest income, we do not see reason for a reduction of deposits. We continue to see improvement in overall deposits in term of total assets, and we do not expect reduction of margins. Of course, the trend is positive. In terms of saving investment account, it is too early to have an opinion on the potential impact in terms of offering and margin. What I can say is that I see an increasing interest from institution, government, and to support an acceleration in bringing the saving closer to the real economy. Equity basically, and this could be supportive for higher margin product. In terms of market share in the proposition of the BTP Valore, we saw a deceleration of BG contribution. We closed at 1.7%, EUR 281 million.
The impression is that the portfolios are pretty mature in terms of penetration of what we don't. In terms of mix, asset under investment.
Sorry, my last question was more, I said asset under investment, but I meant more like the strength in banking under advisory, essentially.
Yes, yes. In terms of asset under investment, let's say that October continued to be strong in terms of asset under investment, and let's say that I am confident to see a positive trend for the next years, providing advanced advisory services on the asset under custody. But in October, we had also an acceleration on some in-house fund solutions, and we started seeing an acceleration also for the insurance wrappers. So let's say that the mix of October is very good, and I think to see further improvements in November and December. As usual, the last part of the year should be positive in terms of mix and asset under investment. Thank you.
In terms of asset under advisory, the EUR 300 million inflow you had in October, was that potentially also driven a bit by BTP Valore, or what are the drivers there?
No, no. BTP Valore, sorry, BTP Valore is asset under custody.
Yeah, okay.
The asset under investment normally is not with the underlying of primary market, so it is negligible, I would say. The contribution is the positive momentum of applying an explicit fee on part of the asset under custody.
Thank you.
Thank you.
Once again, 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. Gentlemen, Mr. Mossa. Okay, sorry. There is Giovanni Razzoli, Deutsche Bank, with the next question.
Good afternoon to everybody. I have two quick questions. The first one, which are more or less related one to the other. I have seen that you have increased the percentage of in-house products when compared to total products distributed from 51% to 53%. I was wondering in the medium term whether we should remain at around this level or if you do plan to increase more significantly this percentage. In parallel with this, the payout to third parties instead remain stable at around 6%. I was wondering if I look at the medium-term perspective whether these percentages can change and how in case you can benefit in terms of average investment fees. Because you are clearly trying to internalize more products also if I look at the recent acquisition of Investlinx. I was wondering whether this trajectory could make sense. My interpretation makes sense. Thank you.
Let's say that excluding Investlinx, so just considering the existing offer, in the medium term, we expect to exceed 60% medium-long term, as we will accelerate in providing personalized solution for clients, hyper-personalized solutions, both in the financial wrapper space as well as in the fund industry. You are right, we will continue with this trend, and this trend will support the margins in the asset management. Investlinx is on top of that and is about providing a dedicated offer as underline of the wrappers and also niche product for institutional investors. We say that Investlinx is not included in this projection. Thank you.
Okay, thank you.
For any further questions, please press star and one on your telephone. Gentlemen, Mr. Mossa, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.
Okay. Just to say thank you for participating to our conference call and have a great day. Bye.
Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.