Afternoon. This is the conference call conference operator. Welcome, and thank you for joining the FinecoBank first quarter 2020 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. Alessandro Foti, CEO and General Manager of FinecoBank. Please go ahead, sir.
Good afternoon, everyone, and thank you for joining our first quarter 2020 results conference call. Today, we will also present our U.K. business right after the Q&A session of the first quarter results. Before we start going through the details of the presentation, let me please underline the key messages of the quarter. Once again, this set of results confirms the soundness of our business model, able to deliver sustainable and industrial growth in every market condition. With brokerage str ongly performing and acting as a perfect counter-cyclical business. Adjusted net profits stood at EUR 92 million in the first quarter of the year, plus 45% year-on-year, thanks to the growth of our very well-diversified stream of revenues.
Operating costs were under control, with cost-to-income ratio declining by 82 basis points year-on-year to 33% and confirming operating leverage as a key strength of the bank. Net sales in the first four months of the year were strong and robust, reaching EUR 3.1 billion, with April being close to EUR 1 billion, plus 89% year-on-year. With an improved mix, which highlights a strong recovery of assets under management as volatility calmed down from its recent peak. This also thanks to the strong suc cess of the new generation of products launched by Fineco Asset Management, which is increasingly becoming the cornerstone of our inflows in ass ets under management.
Also, let me please remind you that our net sales are generated organically, and in the first quarter of the year, only 9% came from recruits made in the last 24 months. Finally, total financial assets in April stood at EUR 79.1 billion, with gathered products reaching 72% of the assets under management. Let's now move to slide five and start commenting our quarterly results. As announced, we recorded very strong results with adjusted net profit in the first quarter of the year, reaching EUR 92.2 million, +45.4% year-on-year, despite the complex scenario. We generated EUR 201.3 million of adjusted revenues in the quarter, up 27.2% year-on-year, supported by whole business areas. Operating costs stood at EUR 66.5 million, +1.9% year-on-year.
Cost-to-income ratio decreased to 33%, despite the continuous expansion in assets and clients, thanks to our strong operating leverage and to the scalability of our platform. Please go through the following slides to analyze more in detail all the dynamics of our results. Let's start with the net interest income dynamics on slide six. Despite the lower interest rate environment, net interest income remained resilient at EUR 68.1 million, decreasing by only EUR 1.6 million in the quarter, of which EUR 0.8 million related to the days effect. Thanks to the continuous enlargement of our quality lending book and sticky side deposits, even more valuable given the current remuneration on liquidity offered by the system.
The yearly decrease was -3.2%, mainly due to the lower interest rate environment, which led to a reduction in average gross margins on interest earning assets from 1.26% in the first quarter of 2019 to 1.08% in the first quarter of 2020. As an example, five-year EURIBOR moved from plus 13 basis points a year ago to -26 basis points in the first quarter of 2020. Finally, cost of funding remained very low at three basis points due to deposits in foreign currencies. Please let me remind you that our cost of funding related to deposits in euro, which represents 96% of our total deposits, is zero. Let's now move on slide seven to deep dive in on our bond portfolio.
Our strategy to run off the UniCredit bond portfolio and move into a more diversified and low-risk investment portfolio through a blend of European government bonds and covered bonds is progressing very well. Our bonds portfolio now includes also France, Spain, Ireland, U.S., Poland, Austria, Germany, Belgium, Portugal, U.K., supranational agencies, and covered bonds, in addition to Italy. Finally, let me please remind you that almost 100% of our financial investments are accounted in held to collect. This allows us to have no impact on our P&L by the widening of the spread. Let's now move to slide eight. Fees and commissions grew by 35.8% year-on-year, driven by all business areas. We will deep dive on brokerage and investing later on during the presentation.
Banking fees benefited for the first time by the contribution of the smart repricing in place starting from February 2020. Trading income, net of non-recurring items, increased by almost 169% year-on-year, driven by the strong market volatility in the quarter. Let's now move on slide nine for a focus on brokerage. Brokerage acted as the perfect counter-cyclical business, allowing us to deliver consistent results also in a complex market environment. In the quarter, overall brokerage revenues stood at EUR 63.4 million, reaching its best results ever, and increasing by 110% year-on-year and 76.5% quarter-on-quarter, recording its best results ever. On the back of the skyrocketing volatility in March of the deep resh aping our offer of the strong growth of new customers, mainly driven by the enlargement of the market as more Italians are now interested in financial markets.
The accelerating trend of brokerage was also confirmed in the month of April, with revenues estimated at around EUR 22 million, +107% year-on-year, bringing brokerage revenues in the first four months of the year to around EUR 85 million, more than doubled year-on-year. Let's now move on slide 10 for a focus on investing. Investing revenues amounted to EUR 60.9 million, increasing by 12.4% year-on-year, thanks to the higher contribution of gathered products and services and to Fineco Asset Management. Investing revenues increased by 3.7% quarter-on-quarter, mainly explained by the higher incentives to PFAs paid in the fourth quarter of 2019, related to the quality of inflows in the asset under management realized in the last part of the year.
This more than offset the quarterly decrease in management fees, driven by negative market effect, in particular in the month of March. Pre-tax net management fees margins stood at 63 basis points in the quarter, decreasing by one basis point quarter-on-quarter. Margins were affected by a lower equity component on asset under management due to the negative market effect recorded in the quarter and by the increased penetration of the decumulation products among our offer of gathered products. After-tax management fees margins remained flat at 46 basis points, thanks to the positive contribution from Fineco Asset Management. As you probably know, starting from last year, Fineco started to offer the decumulation products to its customers. These products tend to build increasing profitability for the bank over the years, as they automatically and progressively invest from conservative asset class toward equity.
We, therefore, agreed to change the contracts related to our financial planners incentives starting from 2020 to incentivize them to maintain their assets for at least three years to obtain the bonus. With the new contract, the cost of incentives will be split over three years horizon, currently with the longer persistence of the assets. Slide 11. As you can see from the slide 11, our results once again confirm efficiency to be part of our DNA and core in our bank, representing a clear and unique competitive advantage. In the quarter, staff expenses stood at EUR 24 million, plus 10.9% on a yearly basis, mainly due to the increase in the workforce related to the business development and to the internalization of some services after the exit from UniCredit Group.
Non-HR costs stood at EUR 42.5 million, decreasing by 2.6% year-on-year, mainly due to a different scheduling of the marketing campaign. Moving to slide 12. As you can see on the left-hand side of the slide, commercial loans grew by 26.6% year-on-year with the usual strict control on credit quality. Let me remind you that our lending is offered exclusively to our loyal customer base, and our deep internal IT culture allows us to fully leverage on big data analytics. This translates into a commercial cost of risk very well under control at 14 basis points as of March 2020, in line with our guidance of the cost of risk between 10 and 15 basis points, which is confirmed also in considering the present context of COVID outbreak and the government decrees to support the moratorium.
Expected losses decreased for all our lending products, thanks to the quality of our lending portfolio. As a confirmation of the quality of our lending book, we only received less than 200 requests for moratorium. We will deep dive more in depth in analyzing our lending offer on the next slide. Moving to slide 13. In the wake of recent events, our cautious approach has become even more conservative. Therefore, we slightly reviewed our 2020 guidance. On mortgages, we further increased our guidance on new production in the range between EUR 400 million-EUR 500 million, as we are observing clients preferring mortgages in a period characterized by very low fixed rates.
Following the decrease of the EURIBOR interest rates connected to the worsening of market condition, we now decrease our expected yield to a range between 55-70 basis points. Let me remind you that our expected loss in this product is very low, and in the quarter, it has moved from around 23 basis points to 17 basis points, thanks to the strength of our big data analytics. On personal loans, we slightly decreased our expectations of new production to a range between EUR 150 million-EUR 200 million per year, and the net growth in a range between EUR 20 million-EUR 40 million, with average yield confirmed between 380-410 basis points. On Credit Lombard , we confirm an annual growth in a range between EUR 300 million and EUR 350 million.
We've expected a yield between 75 and 95 basis points Let me remind you that the Credit Lombard can be impacted by our brokerage platform, as it was the case in the third quarter of 2019. Please keep in mind that for the expected yields, in the case of the market environment changes, we would have to move accordingly. Slide 14 on capital ratio. Fineco confirmed once again a rock-solid capital position on the wave of a safe balance sheet. Let me remind you that following the strong recommendation by ECB and Bank of Italy, we suspended the proposal regarding the distribution to shareholder of a dividend equal to EUR 0.32 per share.
The board of directors will convene an ordinary shareholders meeting after the 1st of October 2020 to resubmit the aforementioned distribution proposal in the same amount already approved by the board of directors and communicate it to the market. For this reason, we will comment pro forma figures, which include the dividend payment. Common Equity Tier 1 ratio pro forma stood at 19.28%. Finally, total capital ratio pro forma stood at 34.94% as of March 2020. Now, I would skip directly to slide 22. In this slide, we summarized our guidance for 2020. Please note that it does not include the revenues and cost related to the U.K. business development.
Also, considering our current outlook, we are on track to achieve our expectations for 2020 results, although with a different mix, and we expect no change in our growth expectations in terms of revenues generation and net profit growth. Net interest income is expected to remain solid and resilient or slightly decreasing by EUR a few millions, on the back of volume effect and the benefits coming from ECB tiering. Let me remind you that this assumption incorporates no change in our investment policy, no increase in our risk profile, and the more dynamic management of our treasury. Deposits are expected to increase in the region of EUR 2.5 billion-EUR 3 billion per year, and new production of lending is expected to be in the region of EUR 0.8 billion-EUR 1 billion per year, equal to EUR 0.6 billion-EUR 0.8 billion net growth.
For investing fees, we give a sensitivity for every EUR 1 billion change in asset under management, which generates around EUR 3.6 million of revenues starting from May the 1st until the year end. Brokerage revenue is expected to remain strong and above our expectations for three main reasons. First of all, the deep reshape of our product offer. Second, the level of volatility, which will probably be higher than the extremely low levels registered in the past years. Third, the strong growth on new customers, driven not only by the increase of our market share, but most of all by the enlargement of the market. In fact, we are observing that more Italians are now interested in financial markets . Let me also remind you that this business acts as a perfect counter-cyclical business.
Banking commissions related to the smart repricing are expected to increase by around EUR 20 million. We are decreasing our guidance on operating cost to a yearly growth of around 4%, thanks to our strong operating leverage. Let me please highlight that this guidance does not include marketing expenses related to U.K., which are expected to be up to EUR 6.5 million. Operating costs in U.K. are expected in the region of EUR 1.5 million. In this case, these EUR 1.5 million are already included in our guidance. What I mean that in the guidance of cost growing by 4%, they are including also EUR 1.5 million related to operational cost in U.K. In terms of future evolution, we confirm our guidance on a continuously declining cost income in the long run.
Thanks to the scalability of our platform and to the strong operating gearing that we have. We confirm our floor of Core Tier 1 ratio equal to 17%, a level that we deem appropriate and massively above the industry average. We expect to stay in the region of 18% for 2020. Leverage ratios stood at 3.73% in March 2020, and is expected to remain above 3.5%, thanks to all the initiatives the bank is undertaking. We are extremely relaxed about our organic capital generation after dividend distribution and payment of AT1 coupon. Also, in the case of an extremely adverse scenario and assuming EUR 5 billion of deposit growth in 2020, our leverage ratio would remain around 3.5%. Cost of risk is expected to remain in a range between 10 and 15 basis points.
Even in this environment, thanks to the high quality of our lending book. Finally, we expect robust and high-quality net sales. Let's now move to slide 23 to deep dive into the impact for the bank from the current situation. Current situation is creating the conditions for further enlarging our growing opportunities and is generating more positive than negative impacts. Among the positives, let me highlight: robust net sales driven both by flight to quality, the increase of share of wallet of our existing clients. Let me remind you that we are one of the few financial organizations able to provide unmatched customer experience for clients. Brokerage is booming and perfectly working thanks to our fintech DNA, even with an enormous infrastructure load managed in the period, both in terms of amounts of data and transactions.
Cost savings, considering that everything is more digitalized following COVID outbreak, the situation is generating a gigantic opportunity to increase the speed at which we are growing. The behavior of our society is changing and there is a massive acceleration in direction of digitalization. Being born already digital and with a strong business model based on innovation, quality, and efficiency, Fineco is already positioned at the sweet spot for capturing this gigantic trend. Let's now move to slide 24. Delivering on industrial measures. Our key priority, going forward, remains to structurally improve the quality of our net sales and client base in order to increase better quality recurring revenues and keep the growth of our balance sheet under control. Our focus on improving of our asset mix is already delivering, in particular, starting from second part of 2019.
On the graph, you can see a breakdown of our quarterly net sales, showing a growing contribution from asset under management, constantly increasing over the quarter, also thanks to Fineco Asset Management. Net sales mix in March reflected both the flexible and transparent approach of our multi-channel platform and extremely high volatility of financial markets. April net sales showed a prompt recovery of the mix, also thanks to volatility calming down a little bit from its March peaks. Asset under management in the month represents 69% of total inflows. Let's now move on to slide 25 to analyze more in-depth Fineco Asset Management. Fineco Asset Management is key in our move to accelerate the conversion of depositing into assets under management. Our latest net sales results confirm once again that Fineco Asset Management is gaining commercial momentum.
In the latest month it has further accelerated its contribution to Fineco's inflows, remaining positive even in particularly difficult environment. This thanks to its ability to create modern and innovative multi-manager solutions, reinforcing our guided open architecture platform and enhancing our time to market in developing our offer to meet evolving customer needs. We just released another new solution suitable for volatile markets, Fineco Asset Management Global Defense, a capital preservation solution for more conservative customers who want to protect capital, and Fineco Asset Management Target Boost, an evolution of the decumulation products for customers who want to take advantage of bear market phases. We are ready to launch a new capital preservation product in the next few weeks.
Finally, I would like to highlight that the penetration of Fineco Asset Management retail class total assets reached 20% of Fineco's total assets under management , and we expect it to grow even further. The penetration on assets under management, excluding the insurance, reached 32% in March 2020, increasing by eight percentage points in one year. Thank you for your time, after the Q&A session, I will hand over the floor to Paolo Di Grazia, Deputy General Manager of the bank, for presenting our U.K. business.
Excuse me, this is the conference 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. The first question is from Domenico Santoro from HSBC. Please go ahead.
Yes. Good afternoon. Thanks for the call. I hope everyone is okay, and family is included. I do have a number of questions on margins and volumes and brokerage, if you don't mind. First of all, margins in the quarter, they held up very well actually. I'm just wondering whether this doesn't include yet the market effect. If you could give us a guidance for the second quarter. In particular, I'm interested in understanding the difference in margin between asset management products and the decumulation products that they were sold during the quarter and also last year. Another question on volumes, whether you can give us or you feel confident enough to give us a sort of a guidance for the sales for the end of the year.
On brokerage, I understand you're doing fantastically here. Also April was very strong. Well, all depends how the volatility will go ahead during the year. Given the change in the customer behavior, everybody is at home and probably will stay at home for longer. Do you see any structural change here in behavior that probably might make you confident in giving us a bottom rock sort of a revenue stream month by month minimum? This is at least for the benefit of our model. An indication for tax rate for the year. Last one, sorry for the very long question. I was just wondering if you accrued any dividend already for 2020, and whether the 17 floor Core Tier 1 includes any payout for 2020. Thank you very much.
Starting from the margins on the asset under management. Clearly there has been an effect that at the end of last year, clearly there has been, in our opinion, an overreaction by the market on our margins because, in the first quarter, there has been a temporary effect caused by the payments of the incentives to the network that skewed on the upper end by the huge overachievement of results by them. This, as we explained during the presentation, was a temporary effect that clearly has finished during the first quarter. Clearly, in the first quarter, the first quarter is including the market effect. In terms of guidance, clearly It's a little bit difficult to give such a precise guidance on margins, because if we assume that the market remains relatively stable.
We don't expect any significant change in the margins. It's clear that in the case that we go throughout another huge market disruption, clearly there is the possibility for a further decline of margins, but mainly driven by the market effect. In terms of margins between the decumulation products and the other products. Clearly, the decumulation products, as you probably know, is a product that they are progressively building up profitability. This gap in terms of profitability on decumulation products has been, in part, offset by the change that we introduced in the contracts for the financial planners. Now, our financial planners, their bonus is related to the fact that they are maintaining their assets over a certain period of time.
This is making us possible to make the margins of the decumulation products more coherent with the longer term picture. Coming to brokerage. Brokerage, clearly, has been pretty strong, as we were saying, driven by the reshape of the product offer. That has been very important and is continuing. The bank has in the pipeline some other very relevant new solutions for better capturing the brokerage opportunities. Second, clearly, the volatility has been pretty high. As you were correctly underlining, there are emerging very clear structural change in the customer behaviors. The most relevant that clear is dramatically growing the number of Italians, that they are starting on being extremely interested in what's going on on the financial market. This clearly is perfectly coherent with the increase of the saving ratio of the Italian family.
On one end, the Italian families are becoming more concerned regarding their future in terms of economic growth, their job, and so on. This is making them clearly much more interested in what's going on their financial assets, because the Italians, extremely clearly, they have sit on a gigantic amount of savings. The most amazing part of the story is not just a matter of Because Fineco, on one end, is continuously increasing the market share. This is just a small piece of the story. The real difference that is emerging, that the market overall is growing in a quite significant way. It's clear that Fineco, being by far the dominant player, is the player that is expected to get the highest level of benefits of this.
Clearly, we expected that structurally, the floor of the revenues generated by brokerage. For us, the floor of the brokerage revenues is the amount of revenues generated in a period of time characterized by very low volatility. We think that the floor of the brokerage revenues is expected to keep on growing over the time, drive n by the new products, but mainly by the continuous enlargement of the market. As we are saying, in our expectation, we are expecting to pay the dividend both in 2020 and 2021, clearly. The 17% floor on the Core Tier 1 ratio is clearly including the payout for 2020. Again, 17% is a very conservative floor. More reasonably, our Core Tier 1 ratio, as we said in the presentation, is going to stay after the payments of the dividend comfortably above the 18%.
On the tax rate on 2020, it's clearly the tax rate. We have to be very cautious in looking to the tax rate, because, for example, in 2020, there is the big jump in brokerage. The brokerage revenues are accounted in 100% in Italy. That has an higher tax rate. Probably, I leave a little bit the floor on the tax rate to the CFO. Please, Lorena, if you want to elaborate a little bit more on the tax rate of 2020.
Thank you, Alessandro. Regarding tax rate, we have to say that in absence of new regulations, we expect the tax rate to be flattish in 2020, also including Patent Box contribution. We don't expect a significant reduction to our consolidated tax rate despite revenues generated by Fineco Asset Management are increasing because, as already said by Alessandro, the majority of the consolidated income will continue to be represented by revenues generated by FinecoBank in Italy, that are growing even more due to the outstanding performance of our brokerage business following the increased market volatility.
Can indication, if I may, on the sales for the end of the year?
In the region of 30% as we have already had in the first quarter.
All right. Thank you. The question about the sales instead. Can you give us an indication?
The net sales, we are expecting our net sales remaining pretty robust. Clearly now, based on the most recent developments, we are starting on sailing, let me say, in unchartered waters, very nice unchartered waters to sail because as we were saying, there is a disruption in the clients' behaviors at the moment in the market that is clearly coming in our favor. I don't want to be too optimistic. To say that we can keep on having the same net sales we had in the month of March and April is not going to be serious, but we expect that our net sales are going to remain pretty robust and strong because the structural trends behind our growth, they are reinforcing.
The most recent events are just anticipating something that we were expecting to happen in the next five or six years probably is going to happen in the next couple of years. Another very important point to consider that these numbers are absolutely amazing and outstanding considering that Fineco practically among the big players is the only one that is not using any shortcuts, any incentives. We have now several players that they are massively overpaying deposits for gathering clients and assets. Fineco is not doing that because we don't need to do that. This massive jump in direction of the much more digitalized and modern world is a massive jump in direction of the Fineco world. On net sales we remain pretty positive.
Thank you very much.
The next question is from Gianluca Ferrari with Mediobanca. Please go ahead.
Yes. Good afternoon, everyone. I have four questions. The first one is once again on brokerage. If you were to split the 76% increase quarter on quarter, between what is VIX related and what is more structural long term, and also related to the new products and features you introduced, could you help us in understanding these two trends, please? The second one is on the distribution costs to FAs. You reminded that in Q4 last year, you reported EUR 8.7 million because at the time, FAs gathered EUR 1.3 billion. Now in April, in one month, you did half of the flows of Q4 2019. My question is it likely that in Q2, we will see once again, something like EUR 8 million-9 million of incentive to FAs if flows will keep pace observed in April?
The third one is on the banking book. Looking at page seven, basically the banking book added EUR 600 million, and 17% of it went into Italian BTPs. I was wondering if now the strategy is to add the vast majority of the increase in the book in BTPs, or in Q2 you are preferring other kind of govies like France, Ireland, or U.S., for example. What is the strategy here? The final question is on the EUR 6.5 million marketing cost in the U.K. Are all one-off costs related to a specific campaign or there will be something more structural, something running in the EUR 6.5 million? Thank you.
On brokerage, it's extremely difficult to make such a kind of distinction. Because to say what is related to the volatility and so on. Let me say that a larger part is driven by the new products and solutions and enlargements of the client base and clients' behaviors. The smaller part is generated by volatility. Because, for example, this is emerging pretty clearly in the month of April. April has been, if you have a look to the VIX of April compared with the VIX of March, clearly there has been a dramatic drop in VIX in April. Nevertheless, we experienced a triple digit growth in the revenues.
Let me say that the larger part is explained by the new product offer that clearly, as I was saying, is continuously improving, and by the continuous enlargement of the base of clients and clients' behaviors. On top of that, clearly there is the contribution coming from the volatility. On the distribution cost, no, we don't expect any significant jump in discontinuity in what we have to pay to the financial planners because as we explained, a large part is represented by the decumulation products. As we explained, we agreed with our financial planners to change their contract. Now their contract is a contract that is giving to us the possibility of clawing back their bonuses in the case the assets are not remaining with us.
This is giving to us the possibility to split the impact of the incentive for the financial planners on a longer period of time. This is an approach that is more coherent with the kind of products that they are distributing. The answer is, we don't expect any big unexpected jump in what we have to pay to the financial planners in the second quarter.
Sorry, Alessandro. Just on this, when the FA is selling the accumulation product, in the immediate moment of the sale, you have to book an incentive in the P&L, right? Regardless of the claw back you can ask for the future.
No, the new contract is giving me the possibility to divide the incentive to pay to the financial planners over a longer period of time.
Okay.
On the banking book, no, the strategy has not changed. By any case, I'm going to leave the floor to our CFO. Lorena, if you want to give visibility on the most recent investments we made of the liquidity, and in which direction has gone.
Yes. As you can see on slide seven, we have invested EUR 250 million, with a longer maturity, because we bought the BTP 2041 and BTP 2044 that we have swapped and transformed in a variable investment, variable rate. We decided to invest in the BTP to keep in balance our portfolio with the maturity, which is structurally below five years.
No, Lorena, I was referring to the most recent investment that's been made in other European govies. I'm referring to this because the question.
This is regarding BTP, but our investment are more skewed towards govies such as France, Ireland, Spain. In the first quarter, we bought more than EUR 1.8 billion of government bonds, supranational agency covered bond.
Lorena, please.
Our investment.
Please, the most recent investment has been made mainly in France, in other countries like that.
Yes. We bought EUR 1.8 billion of bond and EUR 1.6 billion of govies, mainly we bought around EUR 200 million of Spain, EUR 118 million of United States of America, EUR 100 million in France. Several different countries. We bought supranational and agencies, and t he covered bond.
The strategy has not changed at all. Clearly we confirm that our exposure on Italian govies is going to remain unchanged and everything we are going to invest is going to move in other directions. Regarding the EUR 6.5 million of marketing cost, the indication is up to EUR 6.5 million. This doesn't mean we are going to spend. As we explained, in U.K., we are going to keep an extremely pragmatic approach, that is the incremental approach. That has been the approach we always used also in developing the Italian business. The more we get evidence that what we are doing is moving in the right direction, and the more we invest.
At the moment, as probably Paolo will have the opportunity to show to you in just few minutes, the evidence that they are building up in U.K. are extremely positive. Based on the feedback we are receiving by clients and so on. We decided that it was the right timing for starting on putting a little bit more money on the table. Clearly, this means that for this year, if all these positives are continuously confirmed, we expect to spend up to as a maximum of EUR 6.5 million. It's pretty clear that if, for example, it emerge that we are wrong, we probably are going to spend less. If we are right, we are not going to spend more than EUR 6.5 million.
Going forward, again, the approach is going to remain the same, extremely strictly in concurrence with the feedback we are receiving from the market. The more positive is the feedback, and the more money we are going to put on the table. The less positive is the feedback, and the less money we're going to put on the table. It's not a brand new story, it's exactly the way we built the Fineco business from the beginning. Following in a constant way the evolution of the feedback received by the market and by the clients.
Okay. Thank you.
The next question is from Alberto Villa with Intermonte. Please go ahead.
Good afternoon, and congratulations for the results. I have a couple of questions. The first one is a general one, is related to the current situation. I see, and I agree with you about the positive trends that underline your business. I was wondering if you have any specific or broad concern about the current situation and your business or the industry that we should bear in mind, in the short and the long term, if you think there are some, let's say, elements we should consider going forward, and how you think you will address these, if any. The second one is on the recommendation issued by CONSOB of last week about increasing transparency on costs for investment services in Italy.
I was wondering if you can give us an update on your view on that for Fineco and for the entire industry. Thank you.
Regarding the current situation, clearly, I'm starting on making a comment regarding the peculiar situation of Fineco. Clearly, we don't have any particularly concern about the current situation, because it's exactly the contrary. The existing situation is generating an even more favorable environment for Fineco because what we expect also in the case of deepening of the economic recession, we expect the saving ratio remaining pretty high, if not growing even more. Clearly this by definition is a good news for us. Second, clearly what's going on, as I was explaining before, is acting as a gigantic accelerator in direction of making the Italian society much more digitalized and modern. Clearly it's an absolutely great news for us. Generally speaking, the main point of concern of the existing situation remains related to the credit industry.
As you know, Fineco is not a business in which we are particularly involved with, because the most painful part of the story is going to be represented by the corporate business. Fineco is not a business we are running. It's sad to say, but for us, the current situation is creating clearly an even more favorable environment than it was before. Regarding the recommendation issued by CONSOB, they are very well welcome because, as very well known, Fineco has been always characterized by being by far the fairest and the most transparent player in the industry. We think that every move by the regulator in direction of making the market even more transparent and fairer, it's another big push in direction of our world.
Thank you.
The next question is from Elena Perini with Banca IMI . Please go ahead.
Yes. Good afternoon, and thank you for your very clear presentation. I have got some questions on your three business lines, if I may. First of all, on the banking business and referring to slide 22. Your EUR 20 million increase expectation in banking fees includes only the repricing started in February or some other repricing related to the new features of your banking services?
No, it's just related to the latest repricing. It's not embedding any other repricing.
Okay. All the new features will be for free?
Yes.
Okay. Thank you very much. Passing through investing, in your guidance, you mentioned that every EUR 1 billion change of AUM versus the 1st of May generates EUR 3.6 million revenues till the end of the year. I was wondering if you are able to give us some guidance. I know that it is difficult given the current context, but on the level of investing fees compared to last year. Then finally, also considering that you seem very good at the moment in switching the non-managed assets, in particular the direct deposits into AUM. Finally, on brokerage, considering the further shape of your platform, we would expect the brokerage revenues for next year to be lower than this year, considering the exceptional level of volatility, especially in the month of March.
Probably this would help you to keep them at a very good level. If you can add some comments on this, please. Thank you very much.
Coming to the investing sensitivity, clearly it's very difficult to give you such a precise guidance on investing fees, because there is something that we don't manage that is the market effect. Clearly in the first quarter, the biggest driver on the investing fees has been clearly the market effect. At the beginning of the year, we gave a guidance of an investing fees growing in the region of low double-digit area. Clearly, probably there is a question mark that is related to the market effect. Let put it this way. If the market remains in a situation, and I'm not saying a very low level of volatility, but the volatility, this is not such as high and scary as it has been in the month of March.
We can expect that the usual journey in direction of asset under management is going to continue, and so progressively we are going to return in direction of a growth of the low double-digit area. Clearly there is the question mark represented by the market effect. This is the reason why we prefer to give to the market an indication of the sensitivity for every EUR 1 billion of assets, plus or minus. It's the best way for trying to give a visibility to our investors and shareholders on what they can expect on the investing fees.
On deposits into asset under management, I'm trying to give you an answer linking together to brokerage, because we think that the real point of strength to the bank, because your point was, what we can expect to make in terms of progression in moving deposit into asset under management. The other question was what we can expect on brokerage. Why the two questions are strictly correlated? The beauty and the strength of our business model that, for example, case 1, volatility remaining incredibly high and with a continuous market disruption. This clearly is going to put on temporary halt the journey of deposits into direction of asset under management, but it's going to make the brokerage business literally booming.
Case 2, volatility remaining relatively low. In this case, the move in direction of asset under management is going to be pretty robust. Case 3, that in my opinion is the case with the highest probability to happen is, volatility is going to remain, in any case, higher than it has been in the last few years, because the last few years they've been characterized by incredibly low level of activity. Volatility reasonably is going to remain above that level. Second, the structural enlargement of the market is going to continue, because there is a booming demand of financial information and interaction with the markets by clients.
In Case 3, we can expect that this volatility being higher than has been at the very low level of the past few years, but lower than it has been in the month of March. This is the perfect scenario because we can expect brokerage keeping on doing absolutely very well, and at the same time, also asset under management doing pretty well at the same time. We have to work on a scenario. The nice part of the story that in every kind of scenario, the revenues generation of the bank is going to remain pretty strong. Clearly what is going to change probably is the mix. The result is going to be extremely good.
The next question is from Angeliki Bairaktari with Autonomous. Please go ahead.
Good afternoon. Thanks for taking my questions. I have two questions, please. First of all, when I look at your April net flows press release that you published last week, I can see that the number of customers has actually declined a little bit in April versus March, despite the fact that you gained 7,300 new customers. I was just wondering if that is a sign of the current account repricing, and effectively, you have seen some customers exiting the bank on the back of that. How do you expect your customer base numbers to develop going forward? My second question is on the trend you see in terms of AUM net flows in April and perhaps the beginning of March.
Some of your peers have pointed to a very significant reduction in both gross inflows and redemptions from AUM products, in April, with the exception of the decumulation products due to the lockdown. Have you seen a similar trend? Is there a risk that customers may take money out of mutual funds at a faster pace as the lockdown eases in March and in June, and as the economic activity gradually resumes, and customers might be a bit more risk averse? Thank you.
First of all, many thanks for these two questions, because it's giving to me the opportunity to deep dive in a couple of very interesting concepts. The first one, that clearly the clients who are leaving the bank are clearly clients, this is strictly related to the repricing. When we introduced the repricing, we gave as an indication we were expected to lose between 50,000 and 60,000 clients, and this is what's happening. The clients that are leaving the bank are absolutely very low-value clients. Just to give you an idea, their average assets for clients that are leaving the bank is in the region of EUR 7,000. What is emerging now is that the new clients that we are acquiring are definitely of a much higher quality than in the past.
The lockdown is generating a quite significant impact in the clients' behaviors because many new clients are coming to us. They are coming because they've been incredibly disappointed by the quality of the services received by their original banks. Because in this lockdown period, for many clients, it's been almost impossible to reach their banks, to dialogue with their bankers. This has generated a massive frustration in clients. This is acting as an incredibly effective marketing campaign for the Fineco services. What we are observing, that we are acquiring a little bit lower number of clients, but the quality of the clients is much higher than in the past. Considering that for us, our goal is not to get on board the highest number of possible clients, but to get on board the highest possible number of good clients.
This is exactly what's going on, because one thing is to explain to clients that Fineco is perfectly working and is a company able to deliver absolutely outstanding services. It's another thing to experiment what does it mean to interact within a perfectly working bank instead of working with a bank that is not working. This is exactly what's going on. This is making to me the possibility to answer also to your second questions. When we released our numbers of March, in which there's been a quite significant outflows on asset under management, and then followed by a big recovery in April, one of the reason is that Fineco is a perfectly working platform. It's clear that if you don't have access to a platform because it's not working, you are not able to sell.
Probably, this is the first reason why in the case of Fineco, we had in March this kind of move. Second, Fineco has an incredibly transparent platform. Our clients have, in real time, the update of the net asset value of their portfolio. That can be sometime scaring and introducing a little bit more volatility, but is making clients perfectly conscious and aware of what's going on. It's clear that it's a different story if you don't have access to these kind of figures and numbers, because it's a platform that is not giving you these numbers. Clearly, what you can expect that when the final end clients are going to realize the exact situation of their portfolio, probably that is the time in which you can have the reaction.
Fineco, in order to make the comparison between the Fineco platform, the Fineco world, and the other world, Fineco is like to make a comparison between the financial market and the real estate market. The financial markets are immediately reacting to all the news flowing into. The real estate market is much more skewed, but at the end of the story, if there is any bad news, the bad news is going to play in the effect. At the moment, again, same story. If the situation remains a situation decently normal, so I'm not saying with markets going up or volatility coming back down to a very low level, but just the markets not returning to the incredibly scaring high level of volatility to the month of March.
We expect our progress and journey in direction of asset under management continuing and going in the expected direction.
Thank you very much. That's very useful. In other words, if I understand correctly from your comment, you haven't really seen any big change or a suspension of activity from clients in the investing part of the business.
No.
Business as usual for you.
Is exactly the contrary because the most part of the growth that we experienced in April has been driven by new money, new clients entering into the market. Still we have the clients that exited by the market in March that are still waiting for reentering. This is making us extremely positive for the future.
Thank you.
The next question is from Federico Braga with UBS. Please go ahead.
Yes, hello. Good afternoon, everyone. Just a few questions left for me. The first one is actually a follow-up on your Italian bond portfolio. Just to be clear, if I'm not wrong, a couple of quarters ago, you guided for roughly stable expectations in terms of size at around EUR 5 billion. At the end of March, we were close to EUR 6 billion. Looking forward, we should expect the bond portfolio investing to BTPs to remain stable at EUR 6 billion or what else? The second is a comment on your net interest income for 2021. I know that might be still too early, given where rates are now, I was wondering if you could give us a little bit more color on your expectations for NII in 2021. The third question is on the financial advisors.
I saw that Q1 has been the first quarter in a couple of years where the number of advisors actually increased on a sequential basis. I was wondering if you could give us a little bit more color on that, if there was any one-off or any change that drove this increase. As a follow-up question on financial advisors, what has been so far the feedback from financial advisors on the change into their contract that you mentioned before in terms of spreading the incentives over a three-year time horizon? Finally, with regards to the April flows, how much of the EUR 500 million outflows, if you can quantify, how much of the EUR 500 million outflows from deposits actually went into managed products?
How much was actually driven by clients leaving Fineco or parking the liquidity in something else or whatever? Thank you.
On the Italian bonds, the exact position Italian bonds is EUR 5.3 billion. I don't know, Lorena, if you make a comment on the difference between the EUR 5.7, EUR 5.3, because it's a counting difference. Please, Lorena, if you can.
Yes. Yes, the nominal value of our Italian exposure in bonds is EUR 5.35 billion. EUR 5.8 billion is the accounting value, including interest accrued. The nominal value is the right one to take into consideration. We think that we have reached our target.
Yeah. We are expected to remain stable at this kind of level. In terms of indication on the net interest income for 2021 is clearly assuming that all the indication produced by the implied forward curve are right, assuming that to keep on growing our base of deposits between EUR 2.5 billion-EUR 3 billion and something like that, without changing our investment policy, leaving unchanged our exposure in Italian govies in keeping on diversifying and so on. We expect the net interest income for 2021, that more or less the same kind of guidance, so possibly just remaining relatively flat or declining by just a few millions of EUR year-on-year.
On the number of financial planners, the increase of the number of financial planners is just related to the fact that the industry has been very aggressive on the recruiting side, because clearly it's been last year, a year characterized by absolutely enormous results. This has driven many players in direction of overspending for recruiting financial planners. Clearly, as we explained many times, we are not interested in playing that kind of game. Now, the world is returning more normal, and so probably consider that the market conditions have worsened. The industry has returned with their feet on earth, and so what is offered to financial planners is returning to a more normal level.
For this reason, we are resuming the expected normal direction of recruiting of financial planners. In terms of indication, clearly, probably the recruiting of financial planners is the most heavily hit activity by the lockdown, because as you can imagine, it's practically impossible to recruit a financial planner without meeting him physically at least a few times. Again, for us, this is not a matter of concern because the largest part of our growth is driven by organic growth, so we don't care too much. If we return to a more normal situation regarding the lockdown, we expect an gentle rise in the number of financial planners resuming. The change of contracts for the incentives has been absolutely perfectly accepted and agreed by our financial planners.
I want to remind that our financial planners are extremely satisfied because, for example, in this period of lockdown, it's not just for the clients realizing how it's different to be a Fineco client, but also has been on the financial planner side, realizing how it's different to be a Fineco financial planners. When you are able to keep on working perfectly, smoothly, without any changes with your clients in this kind of conditions, this is a big asset. The outflows of deposits have been 100% driven by investments on asset under management and asset under custody.
Thank you very much. Very useful.
The next question is from Fabrizio Bernardi with Fidentiis. Please go ahead.
Hi, everybody. Just two very small questions. The first one is about marketing. If you're trying to launch any marketing campaign in order to address those clients that are totally disappointed by the way the physical banks are dealing with them. I've met a few friends, to be honest, that said that it was almost impossible to talk with the banks despite what CEOs are telling us during the conference calls. The second question is about the possibility that you could exploit the current situation, the current environment, which is clearly not an easy one, in order to, let's say, enter another European country in order to really get the most of the situation, considering what I said before about the way physical banks are treating clients. Something like a free lunch for you. Thank you.
Regarding marketing, clearly, in this period of time, we are continuing our marketing campaign because the timing is perfect. Never the marketing campaign has been more effective considering that people, they're spending a much part of their time looking to the TV, reading newspaper, in any case, surfing throughout information. What is really working incredibly well, as usual, is the word of mouth. Believe me, particularly with the high-level clients, the word of mouth is disruptive in terms of when you are a client of Fineco and you are talking with your friend and you're saying, "Come on, my bank is working perfectly well," in the other side, there is someone that is absolutely upset because it's more than two or three weeks that he's not able to be contacted by the bank or by the bankers.
This is the main driver behind our growth. Regarding the second question, I don't want to anticipate nothing regarding the presentation of Paolo. Clearly, as we anticipated in the guidance we gave on the cost, we reduced the guidance on cost from 5% to 4%, and this is embedded the operational running cost for running the U.K. business at full steam. That is EUR 1.5 million. As you can imagine, if you are so efficient that every single new country you are opening is going to cost you, in terms of operational running cost, just EUR 1.5 million, clearly there is no limit regarding what you can do in terms of expanding your geography in terms of what we are doing. Again, this thanks to the incredibly operational efficiency of the bank.
It's just a matter of how much gasoline you want to put in the engine on the back. The engine is incredibly low consuming in terms of gasoline. EUR 1.5 million for every country that you decide to launch, it's really a very negligible amount. At the moment, we are going to remain concentrated on U.K. because we want U.K. be full up and running as you will see in a few moments, everything is extremely promising, but it's pretty clear that we are ready for repeating the experience in other European countries for sure. Thank you.
The next question is from Luigi De Bellis with Equita SIM. Please go ahead.
Yes, good afternoon. Just with one quick question. With respect to lending, which products are registering higher demand? On which one do you see more risk in terms of new production going forward? What is your strategy on lending going forward? Thank you.
On lending, our strategy is pretty simple. We are taking an extremely cautious and conservative approach. The lending is the business in which clearly we have decreased the most our interest on the short term for a very simple reason, because unless we don't have an higher visibility on the macro picture, we think that it's extremely important to be very conservative on lending. Clearly, we remain absolutely, perfectly, we didn't change our position on Lombard loan because clearly this is not the case. On the residential mortgages and personal loans, we have become even more prudent and conservative than we were before. Exactly because we preferred to see what's going on at the moment on terms of macro picture, and then we will see.
In any case, as we explained, we are extremely relaxed on the lending business because the business is small, in case of very high quality. We think that the most relevant demonstration of the quality of the lending book is the fact that we just received only 200 requests of a moratorium by our clients. The lower is the quality of your clients, and the higher the numbers of moratoriums that you are going to receive in terms of demands. This is a very pretty clear ratio. Our strategy is to be very conservative and cautious. If you make a few hundred million EUR less or more of lending, is not going to change absolutely nothing in terms of our revenues generation.
Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone.
If there is no more questions, I'm going to hand over to Paolo for a quick, deep dive in what's going on in U.K. Please, Paolo.
Thank you, Alessandro, good afternoon, everybody, and welcome to this presentation. Let's start on slide number two. In 1999, Fineco disrupted the financial service market in Italy with a simple action that until then was unimaginable. Combining online banking, trading, and investment service in one account. This model has enjoyed 20 years of success by mixing the convenience of the one-stop solution with continuous innovation, very high-quality service, and fair pricing. We believe that today there is a similar opportunity in the U.K. market, which Fineco can successfully seize by introducing a business model similar to what we did in Italy, a unique one-stop solution with best-in-class customer experience and over 20 years of in-house digital knowhow in the financial industry. The U.K. is an extremely fragmented market, where people have relationships with too many providers.
For this reason, we believe that our model, which aim to simplify the customer experience rather than having to interact with several disconnected providers, will be successful, mainly acquiring clients coming out from the traditional banking system. Let's now move on slide number three. The type of customers acquired so far already shows that the one-stop solution is a popular solution. Those who initially chose us for multi-currency also trade now, and those who invest or trade also use payment services. We therefore have a lot of potential to meet a variety of demands, concentrating all customer needs in one offer. The numbers clearly show that once client has an account, will naturally start to use the different service available.
For example, 50% of our client traders also use the debit card, and 50% of our clients also use multi-currency services. We expect a further increase in this multi-product behavior once the investment service is ready. As we know that 46% of our actual client base also uses other providers. Let's go now to slide number four. The one-stop solution allows us to target diversified range of clients, so OTC and stockbroking users, self-investors, and multi-currency users, but it also allows us to exploit a diversified range of acquisition sources, ranging from traditional banks to specialized brokers. All segments are growing, and very often clients overlap among different targets. It gives us a huge acquisition opportunity, leveraging our one-of-a-kind offering, including brokerage and investment services in one single account.
As an example, over 300,000 U.K. clients are both self-investors and active in stockbroking. We also see tremendous opportunities in the investment arena where the U.K. represents EUR 1 trillion of addressable market, and this number is growing. We plan to acquire a large part of our new clients from traditional banks. This is what happened in Italy over the last 20 years, and we are seeing the same pattern in the U.K. The table below shows where our new clients are coming from. Mainly, as you see, from traditional high street banks. Let's go to slide number five. This slide clearly shows how our one-stop solution can meet the U.K. market demand. Today, there is no financial player in the U.K. capable of satisfying all financial needs through a single turnkey platform.
Please note that ISAs will be ready in the coming months, while SIPP will require the branch to be fully operational before launch. The more detailed timeline will follow later in the presentation. Moving on slide number six. Our strategy is also based on service quality. This table shows the technological tools available to our clients for free, compared to what competitors offer. Clearly, you can see we provide several features, such as free market data for trading, real-time screener to identify stocks, and budgeting tools used more for banking, obviously, which none of the domestic players is capable of offering. Now let's move to slide number seven. As you can see from the two table, we are extremely competitive in equity CFDs, where we want to go with an innovative modeling.
Offering the CFDs at zero commission and no added spread, while average U.K. clients are charged 10 basis points. Indices and FX CFDs are also very competitive spread-wise. A more detailed slide on the type of client we're acquiring will follow, but we also acquire stockbroking clients, and a good 12%-15% are also trading CFDs, where we have a better remuneration. We can offer this competitive pricing, thanks to our proprietary order internalization model, as you know. However, it's important for you to understand that currently, we have a huge gap in our favor in term of pricing, but also in terms of functions, analytical tools, and platform usability. Our operative efficiency and economies of scale allows us to be sustainable and profitable, even with such low fee. Let's move on slide number eight now.
Our multi-currency service is also one of a kind. We're talking about 20-plus currency multi-purpose account that can be used for bank transaction, to diversify liquidity, or to invest and trade in local currency, all without fee costs or exchange fee, in real time, and from your website or mobile application. Despite the fact that our purpose is not to compete with other challenger banks, and we have a very different target, our multi-currency service can compete with challengers for both small transaction and larger transaction, more in line with the investment and trading target that we have. Moving to slide number nine. This slide shows the great effectiveness of our pricing, both for platform and transaction fees. As you know, some players apply dealing charges to the fund transaction.
In line with the idea to offer a simple and transparent service, we choose to apply only a platform fee. Once again, I would like to emphasize that competitive pricing is only one of our strengths. We believe that our success is combining best-in-class pricing with state-of-the-art services in terms of product range, service quality, user experience, customer care, usability, and even the platform look and feel, combined with a one-stop solution approach. Let's now move on slide number 10. Let's talk about the marketing strategy. From a communication point of view, our market penetration strategy involves two distinct phases. In phase 1, that already started few days ago, we exclusively target the most profitable segment with a shorter payback period, meaning the traders. This is the same strategy we used in Italy when we started back in 1999.
At the very beginning, leveraging our very distinctive brokerage service in order to be more effective in our marketing expenses. In the second phase, starting from Q4 2020, we'll broaden our communication to target B2C investors focusing on a multi-brand platform. The campaign obviously focuses on pricing. Again, that we want to underline that our low fees are the direct consequence of our ability to leverage and scale Italian technology and our internalization models, which provide us good margin. Let's now move on slide number 11. In both phases, our position will be quality service combined with best-in-class pricing. The tagline at the base of all our marketing strategies, in fact, premium service without premium price, where service may from time to time stand for trading, investing, or even banking.
This way, we are positioning Fineco in the U.K. market with a very unique model, combining pricing similar to a discount broker with the service quality of market leaders in a one single package, one-stop solution. For the first phase, we completely redesigned the website, refocusing the communication on trading in comparison with the main broker to highlight our differentiating points. Let's now move on slide number 12. You will see some of the creative subjects that we are already using in this launch phase. Our current campaign is focused on the brokerage and CFD services. A s we said, the emphasis is on pricing, but we also want to establish ourselves on the market as historical, reliable European leader in brokerage, as we are.
That's why our tagline is, "Trade without compromise." The performance and usability of our platform are distinctive elements. They will make a difference in the U.K. trading community, combined with our wide trading products, from CFDs to stocks, bonds, and futures and options. This way, we will also be able to attract professional trader clients, which we understand to be a very big community in the U.K. Let's now move on slide number 13. Since January, we have been working to shift our focus on brokerage, as we said, where our office is already complete in terms of product, access to the market, and technology. We want to give you a picture of how this new focus is impacting on our KPIs.
Key distinctive elements of client acquisition in the pattern we are going to show have been pricing, multi-product offer on trading, and the new website, and of course, the volatility of this period. Let's see slide number 14 now. Until 2019, our marketing investments were limited and focused on the multi-currency service, just on that. Just a few weeks ago, we refocused our marketing on trading, also starting to invest in online ads, mainly in search engine and programmatic displays. The results are already beginning to show that this repositioning works very well. As you can see in this slide, we want to show you a very limited investment started last month, has already delivered a change of pattern in our acquisition numbers and the quality of the clients.
We wanted to compare a snapshot of Fineco U.K. in the last two months with the previous period. The KPIs on the right side of the slide show that we are acquiring clients at the cost of EUR 600, more or less, in the period. The active clients have generated more than EUR 1,000 of average revenues. We're talking about active clients. When you look at this figure, remember that we are communicating a brokerage message, and we are mainly acquiring traders as clients. Furthermore, the interest in trading and leverage products in our platform is growing rapidly. Let's now move on slide number 15. Let's talk again about the good quality of the new clients we are acquiring.
In the top left chart, you can see the most recently acquired clients activate their account quickly and start trading much earlier, so they're more in target. The revenue mix has changed, benefiting from trading products and brokerage offer in general. 56% of our clients are placing more than five trades a month, and 57% are trading CFDs. Despite the fact that we are not advertising the multi-currency service, we continue to see a regular cash inflow similar to the previous month, and a nice revenue stream. Let's now move to slide number 16. You can see now here is our general timeline. In the coming months, we will focus on the increase of the investment services to launch our ISA account and branch development.
The branch will also be the next step in order to develop other more specific U.K. products, such as the pension plan SIPPs. Just to finish, let's move on to slide 17 to see the development, how we'll develop the investment offering. Let's close with a quick look at the product development timeline. Our trading range, as you know, we said is a complete 100%. In the coming months, we will focus on the enrichment of our multi-brand investment service. We expect to launch at least three new asset managers in a few months, and many others will follow with the next few months as we work to reach a good number of asset managers, which will allow us to satisfy around at least 80% of the inflows demand of the U.K. B2C market.
Now, thank you for your attention. I'll hand it back over to Alessandro for questions. Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The first question is from Domenico Santoro with HSBC. Please go ahead.
Yes. Thank you for this follow-up presentation, U.K. A couple of questions on my side. It's all very clear. My understanding is that you will provide the first step, the trading platform, and then, of course, you will move on to the normal services, being the current account be used just a multi-currency so far. I understand it's a work in progress, but going forward, in a three, five years' time, how do you see the economics here in the context of the wider group? I don't see any targets, of course, for the business. Can you tell us whether at a point you feel confident that this business will represent the next percents of revenues for the group or in the long term, given that you're tackling, of course, very profitable segments for you. Thank you very much.
First of all, it's very important to remind that at the moment, we are focusing our attention on trading, mainly in terms of marketing, because at the moment, the multi-currency account is available, and also on the investing side, we are giving to the clients opportunity to start on using some services. Clearly the strategy is pretty clear to start from trading in terms of marketing, because, in this case, you are going to get on board the clients that have the payback period that is the fastest, so you can be quite fast profitable. Just in order to give you an idea, because the very important number to consider is the EUR 1.5 million of operating cost.
With this kind of strategy, we can say that excluding the marketing cost, the business is going to be profitable starting from the year number one. This is a very important point to consider. For this reason, honestly speaking, it's very difficult to give you such a precise idea about what we can expect to go going forward, because the approach we are using is the approach we used in building up Fineco, first of all, to be concentrated in having an incredibly scalable and efficient platform, making us extremely relaxed and comfortable because the operational breakeven is immediately reached. This is the most important point. Then it is a matter of how much we want to accelerate or not. This is strictly related to the pace we're going to get by the market.
We think that it's not serious to give such a long-term guidance on the business. Clearly, the most important message that the scalability of the platform is making for us possible to launch a business that in the year 1, is immediately profitable from an operational point of view. The market is extremely promising. The U.K. market is in direction of a quite evident disruption, because another very important point that our goal is not to take away clients from the established innovative players like Hargreaves and so on, but is to take clients by the traditional banks, the same job that we have done successfully in Italy, and still we are doing also in Italy, 100% of our clients' assets is coming from traditional banks.
Probably in one of the slides presented by Paolo is pretty clear also that from which kind of banks we are taking our clients. As you can see, are represented all the most established and traditional U.K. commercial banks. It's a little bit too early to give you such a precise indication in terms of contribution on the overall revenues of the group, considering that what we expect also in Italy, we are just at the beginning of our process because our market share is still so small that the opportunity we have also in Italy is gigantic. It's difficult to make a relative comparison at the moment.
All right. Fair enough. Thank you very much.
The next question is from Gianluca Ferrari with Mediobanca. Please go ahead.
Yes, good afternoon again. Three questions here. The first one is, you are referring mainly to traditional banks in the U.K. What about trying to build up a B2B2C network, i.e., becoming the point of reference for ISA, so building up a kind of non-tied agency network in the U.K.? Midterm, do you have any idea or plan or targets in terms of how much ISA versus retail clients Fineco U.K. will have? The second one is, again, if you have an idea of how the investing business will shape in the U.K., i.e., what will be the percentage between firm products versus the traditional open platform scheme that Fineco had also in Italy at the very beginning of its origin. The third one is about the customer service.
Where is the customer service located? Is it domiciled local in the U.K. or is it in Milan? How many FTEs do you need to serve the U.K. clients? Thank you.
As you know, our preference goes definitely for the B2C business because it's more profitable, it's more stable, and has attached higher values and multiple. It's a matter of fact that Fineco is continuously receiving requests by other financial institutions for providing white label services, considering the high efficiency of our platforms. Of course, in U.K., we have been approached for offering our services to independent financial advisors. For the time being, we remain concentrated on targeting the B2C segment because it's by far the most promising. We remain convinced that it's much better to take directly the final clients instead to be intermediated by someone else. At the moment, our target remains concentrated on the B2C side.
We expect clearly that at the beginning, the largest part is going to be represented by the external products of the traditional open platform in comparison with Fineco Asset Management. Clearly, in coherence with what has been experienced by other U.K. asset gatherers, we think that on the long run, Fineco Asset Management can play a very interesting role, particularly with the structured and the portfolio solutions for clients. When we are referring to the EUR 1.5 million of cost embedded in our 4% guidance of cost for overall the bank is considering also the cost for the customer care for U.K.
How many people? Sorry.
Paolo, how many people?
Yes. We can talk about up to 10 people that we can basically use based on the volume of the calls that we have u p to 10.
Okay. Thank you.
The next question is from Angeliki Bairaktari with Autonomous. Please go ahead.
Hello. Just one question from me. Could you give us the number of the amount of deposits and funds that your clients hold in the U.K.? Thank you very much.
At the moment, as you can see, the amounts of deposit and funds is still limited because the most part of the attention is on the traders. In any case, Lorena, you have some numbers on the deposits that at the moment there are in U.K., deposits and assets?
We are close to 100.
100 million.
Yes.
That's the total amount both deposits and other custody assets?
Yep.
Thank you.
The next question is from Federico Braga with UBS. Please go ahead.
Yes. Thanks for taking my questions again. Just three more general questions. The first one is, what level, what number of clients will make you happy, let's say, like in five years' time? Would you be happy with 100,000 clients, 500, 200? Just the number that will make you happy as of now. The second question is, again, what are, in your opinion, the key risks to the execution strategy of the U.K. business over the next 12 to 18 months? The final question is, we saw in the U.S. brokerage entry fees going to zero. You have already a pretty competitive offering in U.K. Would you expect similar trends in U.K. in the next two to three years?
Again, how the U.K. markets work, do you think that fees are a little bit more sustainable with regards to the brokerage business? Thank you.
The number of clients we are going to make our happy because first of all, it's a matter of the quality of the clients because as we were saying with Justin, just this year, we are going to be happy because excluding the marketing cost, the business is going to be profitable. Probably with, I don't know, Paolo, in our extremely basic scenario, that is going to make the business absolutely very well up and running. How many clients we're talking about in the next three years, because that year.
Yeah. Of course, we're talking not just about number of clients, but also target of clients. If we're able to acquire clients that we want, we really want, I think that probably around 30,000, 35,000 clients, we could be happy.
Yeah. As you can see, it's not such an incredible amount of clients because, but again, the strategy is working because our base of operational cost is incredibly low. This is making for us incredibly easy to reach the breakeven and to be profitable in a very short period of time. In terms of execution strategy, honestly speaking, we don't see the only possible risk that the feedback we are receiving at the market are below our expectations. In this case, as currently with what we announced, probably we are going exactly the same we did with Fineco because the process of developing Fineco has not been straightforward. In some cases it's been a little bit bumpy.
Every time that there is something emerging that is telling us that there is something that is not working, we are going to decelerate on what we are spending in terms of marketing, reshaping what we are doing and restarting again. We are not particularly concerned by some kind of execution risk strategy because the concern is coming to you if you have put tons of money in advance on the table. If something goes wrong, clearly you have tons of money put at risk. This is not the case because the amount of money that has been really put at risk is very few millions of euros. We can change anytime, and we can reshape the strategy anytime we want accordingly. We are not concerned by execution risk. It's a business as usual as been the history of Fineco.
Brokerage fees going to zero in the U.S. I want to remind that the U.S. market has a structure that is different from Europe because it's mostly a market driven by market making activities and less commission driven. The market making activity is the point of strength of Fineco because when we are talking about the internalization of flows, we are talking about zero risk market making activities done by us. This is the reason why we are able to offer such competitive fees on the most popular products in the U.K. remaining profitable, just because we are leveraging on our internalization capabilities. We think that we are going to be able to play this kind of game without any significant concern regarding what's going on in terms of pressure on fees.
The next question is from Andrea Scauri with Lemanik. Please go ahead.
Yes. Hi. Good afternoon, everyone. A quick clarification on the strategy in the U.K. I was wondering, does your strategy is not implying any acquisition so everything is organic? If any opportunities arise, would you consider to develop the business also with some acquisition? Thank you.
No, we are not planning any acquisition for a very simple reason. First of all, we have been always very successful on the greenfield in building up from scratch businesses. In any case, we think that in terms of creation of value for our shareholders, the building up from scratch of the business is much better. If you consider that if you go through and also in a small acquisition, you have to put aside a gigantic amount of goodwill and so on. If you compare this kind of goodwill with the marketing expenses that you can make, there is no match. Considering that we have an incredibly, very well-working infrastructure, incredibly scalable, we think that it would be totally a huge mistake to go for an acquisition.
It's much better, again, to go directly for acquiring directly the clients leveraging on our platform's efficiency and scalability.
Okay. Thank you. Very clear and reassuring. Thank you.
The next question is from Luigi De Bellis with Equita SIM. Please go ahead.
Yes, good afternoon. Two quick questions. The first one, what are the characteristics to open a U.K. account with Fineco? Do you need to be a U.K. registered resident? The second question, what is the mix of revenues do you expect at three or five years in U.K. between brokerage investing and payments? Thank you.
Paolo, if you want to give some visibility on this.
Yeah, on the first question, you need to be a U.K. resident, so you need to be there in the U.K. The second question is, of course, in the first phase, the majority of the revenues will come from brokerage. In the next, say one year, probably a little bit less, but let's say one year, the revenues coming from the brokerage will be probably 80%. They will probably decrease gradually because the investing business will kick in. We'll see in probably two or three years from now, seeing brokerage down to 40% and the rest, the big majority is on investing and a small part on payments.
Okay. Thank you. If I may, just a follow-up. Do you expect to be profitable also after marketing cost in 2021?
It depends on how much you're going to spend in terms of marketing. Again, the marketing costs are strictly coherent with the success and the progress. As we were explaining, the incremental approach is based on the concept that the more successful you are, the more money you're going to put on the table. It's matching the questions made by the previous investor that was asking if you want to go for an acquisition or not. The marketing expenses are corresponding to something that you are using for creating your business. We think that it's not the right representation to evaluate the profitability of the business considering the marketing cost, because the marketing cost, they can be stopped any time. What is important is what is remaining.
On the one side, you have your operational cost and the production of revenues. Regarding this point, at the end of this year, the business is going to be profitable.
Thank you very much.
Once again, if you wish to ask a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. Gentlemen, there are no more questions registered at this time.
Thank you very much for your attention, as usual. As usual again, for everybody of you that you have interest in deep diving more in some numbers and concepts, please, you can contact us for arranging any follow-up anytime. Thank you again.
Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephone.