Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the FinecoBank first quarter 2019 results conference call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions. If anyone needs 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. Alessandro Foti, CEO of FinecoBank Bank. Please go ahead, sir.
Good morning, everyone, and thanks for joining our first quarter 2019 results conference call. We are going to introduce a slight change in the structure of the presentation. We are going to jump immediately in giving you a description of the just released joint press release we released a few minutes ago, together with UniCredit. Then at the end of the presentation of this press release and communication, we are going to open the floor for your questions. When we have finished to answer to your questions on this communication, we are going to move again in the presentation of the results of the first quarter, and then with another Q&A session on the results. Thank you.
As you know, the board of directors of UniCredit and FinecoBank approved certain actions and procedures to allow FinecoBank to operate as a fully independent entity from a regulatory, liquidity, and operational standpoint. Also potentially outside the UniCredit group in the future. This potential transition will be conducted in an orderly and smooth way, and will have no implications on FinecoBank's strategy and business model. FinecoBank already enjoys limited synergies with UniCredit, and will continue to focus on maximizing shareholder value through healthy, sustainable, and long-term growth. Let's underline that FinecoBank fully independent will not have any implications for its customers and no material impacts on its capital and liquidity strength, nor on its profitability, thanks to the transitional arrangement agreed with UniCredit. Please note that the arrangements provide for a collateral granted by UniCredit on FinecoBank's existing intra-group exposures.
That will allow us both to confirm our investment strategy without any substantial impact on net interest income, and to maintain a solid capital and liquidity position comfortably above regulatory requirements. Finally, in order to proactively maintain our leverage ratio comfortably above 3% and well ahead of the regulatory deadline in 2021, we are evaluating the issuance of an additional Tier 1 up to EUR 200 million in the next month. The potential AT1 issuance will best position our bank for its continued success in case it becomes an standalone company by safeguarding our rock solid balance sheet and capital position, supporting our business growth needs, and maximizing our strategic flexibility. Let's now move on the slide four to deep dive on the key pillars of the agreement. The transitional arrangements entered by FinecoBank and UniCredit cover the liquidity investment strategy, intra-group services, and the trademark.
Let's underline that such arrangements will be activated only in case FinecoBank were to fall outside UniCredit group. Let's now explore the details of the arrangement. The arrangement agreed between FinecoBank and UniCredit envisage the collateralization of the entire existing exposure towards UniCredit bonds, liquidity, and guarantees with eligible securities, which will, first of all, ensure full compliance with the applicable regulatory limits. Second, naturalize our capital impacts, risk assets absorption, and the risk concentration limit coming from potential deconsolidation from UniCredit. Third, enable us to maintain in place our enhanced investment policy with no impact on our net interest income and profit and loss. Please note that this arrangement has been defined and legally agreed between the parties as part of the framework agreement, and envisage that the collateralization will remain in place until UniCredit bond portfolio entirely runs off by 2024.
The collateral will include CRR instruments eligible for credit risk mitigation and will be compliant with the large exposure framework. Let's underline that following the issuance of the collateral on UniCredit bonds and liquidity accounts, Italy component in our portfolio will be massively de-risked. We have a room to increase the exposure on Italian government bonds while maintaining our investment policy unchanged. We will dive a little bit more in depth regarding investment policy during the presentation of the first quarter results. Let's remind that our objective is to further diversify the investment portfolio in terms of geographies through a blend of European government bonds and covered bonds. With regards to the trade match currently cornered by UniCredit and licensed to FinecoBank consideration free on the basis of an agreement expiring 2022.
The new agreement that will continue to be in the current conditions for FinecoBank, and will include a pre-agreed strike price for a number of given call option windows up to 2032. In particular, FinecoBank will have a first call option to chase the trade match from UniCredit starting from 2019 at a pre-agreed fixed price, which is not expected to have a material impact on FinecoBank capital position. Finally, from an operational point of view, as you know, FinecoBank already operates largely independently from UniCredit. We have signed an agreement with the latter that will be activated should FinecoBank fall outside the UniCredit group. This agreement states that UniCredit will continue to provide for pre-agreed transitional periods, number of services to FinecoBank to allow the latter to act in full operational continuity.
Among the services, it is worth mentioning customer success banking services through ATMs and physical branches with an extension for 20 years, market conditions agreed time by time. With regards to other services, contracts currently in place will maintain in force without interruption for a period between 12 and 24 months. The activities of this contract will be, in the meantime, internalized or replaced with new supply of sourcing contracts with third parties. We don't expect any significant operating impact, not any material impact on cost. We can confirm our guidance on cost-income ratio decreasing over time, thanks to our strong operating leverage. Important to note, this potential operation won't change the strategic pillars of our growth story. FinecoBank will remain committed to maximize shareholders value by running business in a safe, robust, and sustainable way, and focusing on a healthy and organic growth with a long-term horizon.
We can open the call for the questions on this first section.
Excuse me, this is the conference call operator. We will now begin the first question and answer session. Anyone who wishes to ask a question, please press star and one on your customer 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, please press star and one at this time. The first question is from Alberto Villa with Intermonte. Go ahead, sir.
Hi, good morning. I have two questions on this. First one is, when you mention to exit from the perimeter, can you give us an idea what is the level of stake for UniCredit, below which you would be considered to be independent and no more part of UniCredit? Is that a defined threshold or depends on different considerations? The second one is on the impact of the AT1 for EUR 200 million and your long-term targets in term of leverage ratio. If you can give us an idea of what would be the additional positive impact of the AT1 for EUR 200 million, and what is the level of leverage ratio that you would consider to be comfortable for FinecoBank in the midterm? Thank you.
First of all, let me start from the first questions. As you know, there is no any specific threshold fixed in order to establish which is the state that is making you as a control entity of FinecoBank. We think that it's much more interesting to be concentrated on the reoperational gain. What I mean clearly is that what we presented is that in the case there is a disposal, that is producing as a result that FinecoBank is not anymore part of the group and is not anymore consolidated in the group.
This is the main point of attention we think about the market. Clearly, as soon as if in case there is this transaction executed by the group and we fall outside of the perimeter of the group with a deconsolidation of FinecoBank, clearly there is the question mark on the impact generated by the UniCredit portfolio. This is the reason why there has been this pre-agreement that in case this is going to happen, thanks to the collateralization provided by UniCredit of the FinecoBank exposure on the UniCredit bonds, this is not going to create any impact on our capital position because the UniCredit bonds position is going to remain as a zero consumption of risk-weighted assets.
Clearly, this is a kind of arrangement that in the case there is, again, FinecoBank falling outside of the group, is not going to impact the net interest income because we are going to continue to maintain the UniCredit bonds portfolio and keeping on running off the entire portfolio as we guided the market in the previous months. We think that to spot exactly which is the percentage that is going to make FinecoBank be consolidated or not, because in the case FinecoBank remains in the group, clearly, what we as group agreed is not going to be put in place. Or if FinecoBank falls outside of the group, in this case, we are going to have the enforcement of this pre-agreed contract between FinecoBank and UniCredit.
Regarding the leverage ratio, clearly, if we move in the direction to fall outside of the group, clearly we want to be proactive in being sure that everything that is related to leverage ratio is perfectly fixed. As you know, the final regulations on leverage ratio are not fully in place yet. They are expected based on the most recent interaction with the regulatory bodies, expected to be fully in place starting from 2021. Nevertheless, we want to be proactive. Based on the projections, our plans and so on, we think that with an issuance of that kind of size, we can expect to be in a very comfortable position. In terms of what we have in mind as a target, clearly we are targeting to have a buffer with respect to 10%.
Probably we think that considering the extremely safe and conservative business model of the bank, considering the nature of the leverage ratio we are producing, we think that to remain in a region of 3.5%, we think it's a reasonable target level for FinecoBank.
Thank you. If I can, just to follow up. When you mention about the pre-agreed price for the trademark, can we take the carry value of UniCredit that is slightly above EUR 90 million as a point of reference for the evaluation?
No.
Okay.
The stock options are definitely at a much lower level.
Okay. Thank you. Thank you very much.
Please.
The next question is from Fabrizio Bernardi with Fidentiis. Please go ahead, sir.
Hi, everybody. Just two questions. First, I'm curious, why now? Who was the promoter of this kind of deal? The second question is, if you intend to sell back the bonds to UniCredit, should you find an easy alternative in terms of capital consumption? Thank you.
First of all, the why now, is you have to move these questions to UniCredit because clearly they are the entity that is in control of FinecoBank. I cannot give you an answer on this point. Probably tomorrow, we are going to have the presentation of the UniCredit results, and there is an opportunity for making some questions to UniCredit regarding the timing and the decision to move in this kind of direction. Second, clearly, we have the arrangement. We have no interest in the case FinecoBank falls outside of the group.
Clearly, thanks to this kind of pre-agreed arrangement, we have not any specific interest in selling back the UniCredit bonds because thanks to this pre-agreed arrangement, FinecoBank is going to be in a great position because we are going to have an incredibly safe and robust partnership because thanks to the collateralization, the exposure to the UniCredit bonds is going to be almost entirely de-risked. At the same time, we are going to keep on enjoying an interesting net interest income, because clearly, as you know, the UniCredit bonds are characterized by a gross margin that is above the prevailing conditions we have on the market. In the case we have this transaction moving in direction of making FinecoBank falling outside of the group, we are going to find ourselves in an extremely comfortable position. There is no reason that we have to take any other alternative actions.
Okay. Thank you.
The next question is from Anna Lemoine with Autonomous Research. Please go ahead.
Hi. Good morning. I have two questions, please. Firstly, on the UniCredit exposure, what is the level of total intragroup exposure related to UniCredit, not just the bond portfolio, which is currently excluded from the calculation of Fineco leverage exposure? That's my first question. Secondly, have you already received a green light from the ECB and the Bank of Italy in relation to this transitional agreement? Thank you.
Regarding the overall exposure, is EUR 11 billion, more or less. More or less is EUR 11 billion. Regarding the clearly all the recent arrangements reached between UniCredit and FinecoBank, there's been some discussion and meetings with the regulatory bodies that had the opportunity to have full visibility on this possible evolution, and they didn't raise any kind of specific concern on the structure of this potential deal.
Thank you.
The next question is from Gianluca Ferrari with Mediobanca. Please go ahead, sir.
Yes, good morning, everyone. A very quick one about the timing. When will the financial collateral be given to FinecoBank by UniCredit? Do you have any exact date to share with us? Thank you.
We don't for the very simple reason, because as we explained, this is a pre-agreement. This agreement is going to be put in force as soon as we have FinecoBank falling outside of the group, we don't know if, when, and this is going to happen, because this can happen in the next few hours, in the next few days, in the next few months, or in the next few years, or never. We don't know, clearly. Immediately as has been explained in the press release, that this is a pre-agreement that is going to be put UniCredit in a position to take all the, for them, decisions in their best interest, considering also short-term actions. We have not talked of timing.
Clearly, the only thing on which we are sure that immediately after there is a transaction that is creating the conditions for having FinecoBank outside of the group, immediately we are going to have the collateral in place. This is going to leave the capital position of FinecoBank completely unchanged. Clearly, we don't need to go through any kind of a capital increase or change in our approach, in our dividend policy, or something like that, this is that. This is the frame.
Clear. Thank you.
The next question is from Filippo Pini with Kepler. Please go ahead, sir.
Yes, good morning. Two brief questions. The first one, is it mandatory for you to buy back the brand? The second one is on the EUR 7 billion of AT1 already on your balance sheet. This bond implies a provision for early redemption, I mean, ahead of June 2023, in case of change of control of FinecoBank, on the other three, exit of UniCredit from FinecoBank shareholder base. Thank you.
We have not any stringent obligation of buying back the brand, the trademark. Clearly because I want to remind that we have an agreement that is going to remain in place also in the case we fall outside of the group, that is giving to FinecoBank the possibility to keeping on using the brand for free until 2032. Clearly, there is also, we have an additional opportunity to have the exercising of the options of buying back before this date, the brand. Considering that particularly for the most immediate date, the conditions which we can exercise these options, they are not expected to cause any kind of significant material impact on our capital position. Clearly, this is an absolutely interesting option that we have on the table.
Clearly, we have not taken any decision because again, this is something that is going to be related to the case we have FinecoBank falling outside of the group. If we have this happening, we are going to decide. We think that both the two alternatives are absolutely interesting for us, both going through a short-term exercise of the option or keeping on running the bank until 2032 without paying nothing. Again, the point is that the trademark is not going to be absolutely an issue, and is not going to create any kind of real material impact on the capital position of the bank. Now, regarding the AT1 redemption, no, there is no clause that they are imposing to us the redemption of the previous issued AT1 indicates we fall outside of the group.
Thank you.
The next question is from Luigi De Bellis with Equita SIM. Please go ahead, sir.
Yes, good morning. Just one very general question. Which are the main operating risks do you see from the transition, and what will change for you on a strategic point of view in case of total exit by UniCredit? We can expect an acceleration of what organic and external growth. Generally speaking, looking at your future strategy, how much is important to have a shareholder like UniCredit than, for example, a private equity to implement your strategies? How much is important? Thank you.
In the case we fall outside of the group, we don't expect any significant change in what we are doing. I want to remind that FinecoBank, because this has been a choice taken by the group many years ago, FinecoBank has been also before the listing, an independent company. This means that it's a long time that we are running our own IT and operational platform. We have our own brand, our marketing strategies and so on. After the listing, this has been even more reinforced. In terms of, nothing is going to change. FinecoBank is going to remain pretty much the same in terms of what we are doing, and the bank is perceived as a standalone independent company. We don't expect. Clearly, we are not going to change our strategic direction.
The bank is going to remain concentrated on organic growth because we are expecting to keep on growing extremely robustly. I want to remind that differently from strategy pursued by other European banks, never there has been in place any kind of commercial agreements between FinecoBank and UniCredit. FinecoBank has been used to compete against UniCredit Bank the same way we were competing against all the other Italian banks. The same has been for UniCredit Bank with respect to FinecoBank. We are also from this point of view, the clients are coming to FinecoBank, clients, they are directly coming to us just because they are interested in having a relationship with FinecoBank. It's not the business model around, for example, like the Commerzbank group in which Comdirect is the digital arm of the group. This is not the case.
From an operational point of view, the most part of the activities run by FinecoBank, they are being characterized by full independency. The only real very important to fix that were relating to the access to the ATMs, the network of ATMs of group and the branches. Based on this agreement, FinecoBank is going to have the possibility to have access to the ATMs network and branches for the next 20 years. It is a period of time in which probably we can expect probably some structural changes in the behaviors of the clients and so on. We think that we are going to make us in a very comfortable position for managing the cash of the clients, and so on. Our story is not going to change. We're going to keep on continuing doing business as usual.
What clearly was extremely important to be sure that in the case the group is going to move in the direction for a disposal of the stake, making FinecoBank falling outside. Clearly, this is not going to have any impact on our liquidity, capital, and P&L position.
Thank you very much.
As a reminder, if you wish to register for a question, please press star and one on your telephone. For any further questions, please press star followed by one. Mr. Foti, there are no more questions registered at this time.
Thank you. Now we can move in the ordinary part of the presentation, relating to the first quarter results. If we move to slide seven. The adjusted net profit in the first quarter 2018 at EUR 62.6 million, +6.1% year-on-year, despite a more complex environment compared to last year. Once again, this set of results confirms the soundness of our business model, able to deliver sustainable and industrial growth in every market condition. The quarterly comparison is affected by some effects covered in the first quarter. We will deep dive on them in the following slides. Generated EUR 158.2 million of adjusted revenues in the quarter at 1.2% year-on-year, supported by investing and banking area, while brokerage was affected by low market volatility. And the comparison affected by days effect and write-backs on financial planners' incentives in the last quarter in 2018.
Net of these effects, adjusted revenues would increase by around EUR 0.5 million quarter-on-quarter. Operating costs stood at EUR 65.3 million, +2.6% year-on-year, mainly due to a different distribution of marketing costs, as they are more effective in the first part of the year. Regarding costs, this means that we are not going to change our marketing budget. It's going to remain exactly the same with respect to last year. The only difference is that there has been a different distribution from a temporal point of view. We spent more in the first quarter. We are going to spend less in the second part of the year. On this point, we confirm our guidance on marketing costs around EUR 20 million. Net of this effect, amounting to around EUR 100 million of operating costs would be flat year-on-year.
As usual, the first month of the year, we are affected by some seasonality, such as financial planners' social security contribution, not particularly relevant in amending the operating performance. Net of seasonality effect and of the above mentioned difference marketing cost distribution, operating costs would increase by around 2.7% quarter-on-quarter. Cost-income ratio at 41%, well under control, despite the continued expansion in assets and clients thanks to a stronger operating leverage and to the scalability of the platform. Please go through the following slides to analyze more in detail all the dynamics of our results. Let's start with net interest income dynamics in slide eight. Net interest income increased by 2.1% year-on-year, supported by strong volume growth, both high quality lending and sticky site deposits. It's even more valuable given the current remuneration on liquidity offered by the system.
Volume dynamics more than offset the reduction in gross margins. As you can see at the bottom right of the slide, average gross margins on interest earnings assets lowered from 1.33% in the first quarter of 2017 to 1.26% in the first quarter of 2019. Cost of funding remains very low at five basis points due to deposits in foreign currencies. Please let me remind that our cost of funding related to deposits in EUR, which represents 97% of our total deposits, is zero. Quarterly comparison, mainly affected by days effect amounting to EUR 1.4 million. Net of these effects, net interest income would increase by 1.3% quarter-on-quarter. In the following slide, you can find the focus on our bond portfolio.
As you can see, our strategy to run off the UniCredit bond portfolio and move into a more diversified investment portfolio through a blend of European government bonds is progressing very well. Our government bonds portfolio now includes also France, Spain, Ireland, U.S., Poland, Austria, Germany, Belgium, and sovereign national agencies. In addition to Italy. Moreover, our bond portfolio now includes also covered bonds to take advantage of any favorable market conditions and further increase the diversification of the investment portfolio. Let's underline that in the case we have FinecoBank falling outside of the group, and for this reason, in the case we are going to have in place the collateralization of UniCredit bonds and liquidity accounts, clearly, we are going to experience, in that kind of case, a massive decrease on our Italy exposure.
This means that we have room for increasing a little bit more our exposure to Italian Govies. To give you a more precise number, at the moment, we have an overall EUR 3.9 billion of Italian Govies. Probably in the case we have the events of FinecoBank falling outside of the group and having the collateralization of the UniCredit bonds in place, in this case, we can expect by 2020 to have an overall exposure to Italian Govies in the region of EUR 5 billion. It's not a huge increase, but this is related to the fact that in case we have these events happening, we are going to find the FinecoBank balance sheet massively de-risked, and so we have to recover a little bit more on that side. Let me also remind our sensitivity to a potential increase on interest rates.
A parallel shift of 100 basis points would generate EUR 113 million of additional net interest income. Let's now move to slide 10. Fees and commissions grew more than 8% year-on-year, with management fees up 13.7% thanks to a larger contribution of guided products and services, which moved up from 64% in the first quarter of 2018 to 68% in the first quarter of 2019, and thanks to the new Fineco Asset Management. Let me highlight once again that our investing fees are strongly sustainable, as for most represented by recurring fees. Entry fees only weigh around 2% of investing revenues, and our business model does not rely on them as they are not aligned with the interest of clients, but they are just an anticipation of future profitability for the bank.
Profitability on assets under management, calculated as management fees, net of taxes on assets under management, reached 48 basis points in the first quarter of 2019. The quarterly comparison was mainly affected by right mix on incentives to financial advisors in the last quarter of 2018, with an impact of EUR 3.6 million, and these effects in the first quarter of 2019, with an impact of EUR 4.6 million. In addition, as previously mentioned, first quarter 2019 was characterized by a very low market volatility. Trading income positively impacted by Visa valuation quarter-on-quarter. Net of this item, adjusted trading income would increase by 6.8% compared to the last quarter of 2018 and 35% on a yearly basis. Decreased, excuse me.
The adjusted trading number would decrease by 6.8% compared to the last quarter of 2017, and by 35% on a yearly basis due to the new ESMA regulation in place since the second half 2018. In the current environment, characterized by higher regulation and low market volatility, clients are moving more and more towards multi-currency and are returning into listed products. Let's remind that our offer is already well diversified between over-the-counter and listed products, putting us in a better position to meet evolving requests from clients. Please note that we are setting up new products and solutions to offset both the effects of higher regulation and the possibility of a market characterized by prolonged low volatility. Slide 11 on costs.
Let me remind that as mentioned on slide seven, total operating costs in the first quarter were affected by a different distribution of marketing costs among the quarters, and they are more effective in the first part of the year. Second, the usual first quarter seasonality related to higher financial planners' social security contribution, such as Fondazione ENASARCO and FIRR termination compensation fund, as the payments are subject to a yearly cap. Net of these effects, operating costs would be decreasing quarter-on-quarter and would be flat year-on-year. Staff expenses were at EUR 21.7 million in the first quarter, 5.5% more compared to the first quarter of 2018, mainly due to the increase of the workforce related to the business development costs related to Fineco Asset Management not fully in place in the first quarter of 2018.
Non-HR costs at EUR 43.6 million, plus 1.2% year-on-year, despite the enlargement of assets and clients confirming the operating leverage as a distinctive competitive advantage for our bank. Net of the above mentioned effects, non-HR costs would decrease by around 3.8% quarter-on-quarter and 3.6% year-on-year. 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 we have. Slide 12, commercial loans grew 36% year-on-year with the usual strict control on credit quality. Let's remind that our lending is offered exclusively to our loyal customer base, and our deep IT culture allows us to fully leverage on big data analytics.
This translates into commercial cost of risk very well under control at 17 basis points as of March 2019, due to the improvement of expected losses on personal loans. For 2019, we expect the stabilization of our cost of risk at around 25 basis points, much lower compared to system. Let's move now in analyzing our lending offer more in depth. Moving to slide 13, mortgages grew by almost 48% year-on-year, reaching EUR 918 million as the end of the first quarter. Average loan to value on total outstanding at 52% and average maturity at 19 years. Personal loans grew 15.6% year-on-year with very attractive margins. Lombard loans exceeded EUR 1 billion in March 2019, increasing by more than 35% in one year. Thanks to the new Credit Lombard.
We confirm our guidance for 2019 on mortgages, a new production of around EUR 350 million, as we prefer not to compete against the system in red zones characterized by aggressive prices, high loan to value, and longer maturities. On personal loans, new production of around EUR 250 million per year. On Credit Lombard, we expect around EUR 500 million annual growth. Slide 14, capital ratio. FinecoBank confirmed the rock-solid capital position on the wave of a safe balance sheet. Common Equity Tier 1 ratio amounted to 20.98%, and total capital ratio at 29.14%, including the additional Tier 1 issued at the beginning of 2018. On slide 15, we show an overview of the total financial assets growing trend, supported by the healthy expansion in new inflows. We generated EUR 28.4 billion net sales since 2013, leading total financial assets above EUR 74 billion in the first quarter 2019.
Gathered products increased their penetration rate to 68% of total assets under management from 67% in December 2018. Jumping to slide 18, out of EUR 1.7 billion of net sales, first quarter of 2019, 88% was organically generated through the existing financial planners or directly by the bank, and 12% came from recruits made in the last 24 months. For 2019, we expect a robust net inflows driven by structural trends and by the high quality of our proposition. The recent launch of some brand-new product and services, such as Plus and Core Target, is helping us in offsetting the higher propensity of clients to remain in a wait-and-see mood in this very complex market environment. Now I will speak directly to slide 21. That is the shareholders' value.
As you know, sustainability and healthy growth are at the heart of our business model, and all our choices are current with this strategy. This currency is key to be long-term winners, especially in a challenging macro environment characterized by pressure on margins, lower expected returns, and demanding regulation. We're strongly committed in achieving the highest shareholder value by running the business in a safe, robust, and sustainable way. This slide will summarize the main aspects of our strategy. Safe and diversified low-risk assets, which coupled with valuable and sticky deposits. In fact, client acquisition is exclusively driven by our best-in-class service model without leveraging on short-term incentives. As a matter of fact, our cost of funding is close to zero. Second, fairness and respect towards clients is the right motive in our day-to-day activity, as the relationship with our clients is the most valuable asset we have.
This translates into sustainable fee structure and organic growth as the main engine of growth. Our investing revenues are mostly recurring, with just 2% up front on total investing fees and no performance fees. Solid capital position. Finally, in addition, a deep internal IT culture allows us to leverage on cutting-edge technology, difficult to replicate, and leaving our operating leverage unmatched in the banking system arena. This allows us to have a highly scalable, low-risk business and expand growth opportunity. Moreover, all the above-mentioned aspects lead to high-quality, recurring, and predictable profitability over the cycle, characterized by diversified and sustainable revenue growth in all market conditions. Let's now move on to slide 30, related to FinecoBank Asset Management. FinecoBank Asset Management is key to further improve operational efficiency in several aspects, meeting evolving customer needs and dealing with market challenges.
Just a few words on our main achievements in key activities for 2019. With regards to Core Series, FinecoBank Asset Management actively worked on improving product efficiency and optimizing the existing funds for clients. For this year, we work to further improve operational efficiency. With regards to sub-advised funds, new 31 strategies equal to 78 new ISINs were released in 2019. The offer will be released, and in 2019, the offer will be enriched through partnership exclusively dedicated to FinecoBank clients. The transformation of underlying asset with insurance wrapper is concluded. Finally, the first nine FinecoBank Asset Management living box were released, and the new passive strategies are now available. In the first half of 2019, more multi-thematic funds will be launched, and FinecoBank Asset Management will be working on further evolution of our advisory products. Moving now on slide 33.
On this slide, a quick update on FinecoBank U.K. in patent box. In U.K., we acquired about 3,400 clients. With a very interesting mix, 57% is represented by non-Italians, of which 42% are native British. Considering the steady level of revenues constantly generated, we now started a phase 2 of this initiative with more boost in marketing commercial activities. ISA and multi-brand funds are now under implementation and are expected within the first half of 2019. Quickly, just on the patent box. The closing of the process is still in the hands of the revenue agency. Let me remind you that we applied both for intellectual properties, as our platforms are internally developed, and also for the trademarks. The fiscal benefit will cover five years, from 2015 to 2019. Intellectual properties are renewable according to international guidelines.
We are confident to close the agreement with Italian fiscal authority by year end, as the deadline for the five years validity of the norm expires in 2019. Alternatively, we cannot exclude, consider the option to self-determine the patent box benefit as set by the decree in Decreto Crescita, approved in April 23, 2019, and according with the further implementation details that should be provided by the tax agencies within 90 days of the approval of the decree. Let us now move to slide 34. In the second half of the year, we will start on preparing the launch of two brand new platforms that will be available starting from 2020, and that will further strengthen the productivity of the bank. This step will be the third evolutionary step in the history of our bank.
Leveraging on our internal IT culture and best-in-class technology, we are the only one player able to combine cyborg advisor approach with big data analytics. The new platforms are an additional step that will allow us to deal with pressure on margins by further improving productivity. They will help us to better exploit the potential growth of assets and clients, at the same time, to better serve them. Let us now move to the next slide for more details. The assisted selling platform will be an evolution of the X-Net platform, which will be further improved with clients' financial gaps in the financial advisor front end. The bank will then provide a tailored solution to help the financial advisor solve the financial gaps of the clients. This will further help the financial advisors in managing the relationship with clients.
The coworking platform will enable the financial advisors to share clients with other colleagues in order to better serve them. It will therefore be a strong boost for our assisted selling platform and will be particularly suitable to develop private banking customers as they could be covered by more financial advisors with a wider set of competencies. Thank you for your time, and now we can open the call to questions for this second section.
Excuse me. This is a call from the conference operator. We will now begin the second question and answer session. Anyone who wishes to ask a question may press star and one on your touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. The first question is from Gianluca Ferrari with Mediobanca. Please go ahead, sir.
Yes, hi. Only one question, Alessandro. I spotted from Assoreti numbers that out of your EUR 680 million net inflows in Q1 in asset management, the vast majority is classified as insurance. Now, assuming that most of those products were so-called multiramo, can you give us the percentage of life traditional, of Ramo I out of the EUR 680 million? Thank you.
In the multiramo, the percentage is probably in the region of 40%.
Okay, out of the EUR 680 million total inflows in Q1, probably EUR 250 million-EUR 300 million went in separate. Is that correct?
Yes.
Okay, thank you.
The next question is from Elena Perini with Intesa Sanpaolo. Please go ahead, madam.
Yes, good morning. I have four questions. The first one is on the trend of net inflows in April. Have you seen a recovery in assets under management, or clients are still moved by a cautious attitude? Management fees. The year-over-year progress we saw in the first quarter could be considered as a proxy for a trend of the full year, considering the increasing contribution of FAM. On the brokerage, I was wondering whether the level of revenues recorded in the first quarter could be considered as a run rate for the following quarters, too. Finally, on lending. As regards the cost of risk, where we see a positive trend, a reduction trend, could we expect it to be lower in the full year compared to the full year 2018?
Always on lending, I was looking at slide 13 on Lombard lending, and I saw an expected yield of 80-85 basis points. While in the full year results, if I am not wrong, you provided an expected yield of 110 basis points. I was wondering if you could elaborate a bit on this difference. Thank you very much.
Excuse me. Let me start from the inflow trend. The point of attention is not on the asset under management, is from the beginning of the year, we had an absolutely decent mix. The bank has been able to be quite effective in driving clients in asset under management products. The point of attention is clearly the clients are maintaining a cautious approach. This means that they have a preference for more conservative solutions, clearly characterized by an immediate lower profitability. For example, when we are talking about the deaccumulation products, the products that the clients are deaccumulating progressively from the Ramo I to the equity clients, clearly the profitability tends to adapt and to increase going forward. We expect that the positive trend in terms of the type of clients for asset under management products is going to continue.
We remain confident to be able to achieve better results than last year, probably with a more conservative approach with clients, because the mood of clients is in that direction. On the management fees, clearly we expect an increase. An increase because we are going to have the gap in terms of volumes. Clearly, we expect a growing contribution by Fineco Asset Management. This, we think that it's going to offset, because on the other side, the negative component is going to be represented by the clients moving to more conservative solution, and the pressure on margins keeps on building up. Overall, we expect a continuation of this trend of increase of the management fees for the bank. Regarding the revenues, now you cannot use the results of the first quarter as a kind of run rate.
We expect a higher level for the next few quarters. Assuming that we have not any dramatic significant disruption in the market, but assuming a situation relatively stable, we expect that the run increase is going to be higher respect what we experienced in the first quarter. I want to remind that the first quarter has been, we think, a quite remarkable quarter because we had several quite items against us. There are all the, for example, marketing expenses and higher for a seasonal point of view. Particularly what in my opinion is the point of attention is the volatility. The volatility on the market has been incredibly low. If you move, there is in the presentation, page 10 of the presentation. There is at the bottom right of the slide.
It is a much more precise graph on the volatility of the market because it's the volatility reduced by the futures market. That is related to the most relevant markets in which our clients are working. As you can see, there has been a quite interesting pick up in volatility at the end of the year, this clearly has produced quite decent results. At the moment, the volatility is what we see at the bottom. Nevertheless, considering that the results clearly have been affected by this very low level of volatility. In any case, the results of the bank has remained on the growing trend without taking any kind of shortcut.
We remain confident that also assuming volatility remaining at a very low level, thanks to the progressive introduction of new solutions and products, mainly in direction of the option products, to be able, if this indicates the volatility remains pretty low, to have better results in respect to what we experienced in the first quarter, thanks to the continuous innovation of products. On lending, we experienced a quite substantial decrease in the cost of risk. It is related to the fact that clearly the real accounting cost of risk of the bank is much lower with respect to expected, because clearly the quality of portfolio is absolutely. Progressively, this is embedded in the forecast, in the expected cost of risk we are presenting to the market.
No, I'm sorry. Go for it.
We expect that this trend always will continue. We prefer to remain cautious. We are giving as a guideline a cost of risk of 25 basis points. Clearly, we cannot exclude it can be even lower. For the time being, my suggestion is to stay in this kind of range. Regarding the yields on the Lombard loan, clearly 110 basis points yield is related to the whole Lombard loans, and not only the Credit Lombard. The new Credit Lombard has an expected yield that is in the region of 80, 85 basis points.
Okay. Thank you very much.
Considering that clearly this is the fastest growing, the component that is growing the most, however, we can expect then a slight decrease on the overall yields on the overall Credit Lombard performance.
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Many thanks to all of you. As usual, if you need to have some follow-up in our presentation, also related to the press release we released together with the credit and the results, please don't hesitate to call us to arrange a dedicated call with our team. Thank you very much.