Earnings Call: Q1 2019

May 7, 2019

This is the Chorus Call conference operator. Welcome and thank you for joining the Fineco Bank 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. At this time, I would like to turn the conference over to Mr. Alessandro Foti, CEO of FIneco Bank. Please go ahead, sir. Good morning, everyone, and thanks for joining our Q1 2019 results conference call. We are going to introduce a slight change in the structure of the presentation. And so we are going to jump immediately in giving you a Description of the just released press release, the joint press release we released a few minutes ago together with UniCredit. And then at the end of the presentation of this press release and communication, We are going to open the floor for your questions. And when we have finished to answer to your questions On this communication, we are going to move in the presentation of the results of the Q1 and then with another So as you know, the Board of Directors of Uniqredit and Fineco approved certain actions and procedures To allow Fineco to operate as a fully independent entity from a regulatory liquidity and operational standpoint, also potentially outside the Unitivid Group in the future. This potential transition We'll be conducted in an orderly and smooth way, and we'll have no indications on Fineco's strategy and Business Model. Fineco already enjoys limited synergies with UniCredit, and we continue to focus on maximizing shareholder value Through healthy, sustainable and long term growth. Let's underline that Fineco Full Infantas will not have Any indications 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 Uncredit on Fineco's existing infra 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 €200,000,000 in the next month. The potential IT1 issuance will be will best position our bank for its continued success In case it becomes a 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 to Slide 4 to give guide The key pillars of the agreement. The transitional arrangements entered by Fineco and Unicracis over the liquidity investment strategy, Intra Group Services and the trademark. Let's underline that such arrangements will be activated only in case Fineco were to fall outside your credit group. Let's now explore the details of the arrangement. The arrangement agreed between Fineco and Uniqedito envisaged The collateralization of the entire existing exposure towards embedded bonds, liquidity and guarantees With eligible securities, which will, first of all, ensure full compliance with the applicable regulatory limits 2nd, neutralize our capital impacts, risk weighted asset absorption and the risk concentration limit Coming from the potential of the consolidation from your credit. 3rd, NABL has 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 in parties as part of the framework agreement And envisaged that the collateralization will remain in place until the credit bond portfolio entirely ramps 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 a collateral on Unifated Bonds and Liquidity Accounts, Italy complimented in our portfolio will be massively derisked. Therefore, we have a room to increase exposure on Italian government bonds, but maintaining our investment policy unchanged. Then we will discuss a little bit more in-depth regarding the investment policy during the presentation of the Q1 results. Let's remind you that our objective is to fund a diversified investment portfolio in terms of geographies through a blend of European government bonds and corporate bonds. With regards to the trade weapon, currently honed by Unacreditor And license to Fineco consideration 3 on the basis of an agreement expiring 2022. The new agreement will continue to be in the current conditions for Fineco and will include a pre agreed strike price for a number of given call option windows up to 20.32. In particular, Fineco will have the first call option So Chase, the trademarks from UniCredit starting from 20 'nineteen at pre agreed fixed price, which is not expected to have a material impact on Fineco Capital Position. Finally, from an operational point of view, as you know, Fineco already Operates largely independently from UniCredit. In case, we have signed an agreement with the latter That will be activated should Fineco fall outside the Yield Credit Group. This agreement states that Yield Credit We continue to provide for pre agreed transitional periods, number of services to Fineco to allow the latter track to achieve full operational continuity. Among the services, it is worth mentioning customers' access Services through ATMs and physical branches with an extension for 20 years, market conditions With regard to other services, contracts currently in place will maintain in force without interruption for a period between 12 24 months. The activities of these contracts will be, in the meantime, internalized or replaced with new supply Therefore, we don't expect any significant operating impact, not any material impact on cost. So we can confirm our guidance on costincome 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. Feco will remain committed to maximize shareholders' value by running the business In a safe, robust and sustainable way and focusing on healthy and organic growth with a long term horizon. Now we can open the call for questions on this first question section. Excuse me, this is the The first question is from Humberto Vila with Intermonte. Please go ahead, sir. Hi, good morning. I have two questions on this. First one is when you mentioned 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 a unique credit. Is that defined threshold or Depends on different considerations. The second one is on the impact of the €51,000,000 or €200,000,000 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 in Q1 for €200,000,000 and what is the level of leverage ratio that you would consider to So first of all, let me start from the first question. So 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 Fineco. So and we think that it's much more interesting We concentrated on the reallocation of the end. So what I mean that clearly is What we presented is that in the Giza, there is a disposal that is making As producing as a result, that Feneco is not anymore part of the group and is not anymore consolidated because this is the main point of attention We think about the market because clearly in the and as soon as if in case there is this Transaction executed by the group. And we fall outside of the perimeter of the business with a deconsolidation For Fineco, clearly, there is a question mark on the impact generated by the utility business portfolio. And this is the reason why there has been this Trade agreement that in case this is going to happen, Thanks to the collateralization provided by UniCredit of the Fineco exposure of the integrated bonds, This is not going to create any impact on our capital position because the diluted bonds position It's going to remain 0 consumption of risk weighted assets. And clearly, this is a kind of arrangement, but in the case there is, again, Fineco falling upside on the group It's not going to impact the net interest income because we are going to continue to maintain the unit credit balance portfolio and Keeping on running off the entire portfolio as we guided the market in And so we think that it's not we think that To spot exactly which is the percentage that is going to make Fineco consolidated cost because in the case, Fineco It remains in the group clearly. What we have been prepared is not going to be in place. And or if Fineco falls outside the group, in this case, we are going to have the enforcement of this pre agreed contract between Fineco and UniCredit. Regarding the leverage ratio, clearly, if We move in the direction to fall upside of the group. Clearly, we want to be proactive in being sure Everything that is related to leverage ratio is perfectly fixed. As you know, the Regulation the final regulations on leverage ratio are not fully in place yet. The market is they are expected based on the Most recent interaction with regulatory bodies is expected to be fully in place starting from 2021. Nevertheless, we want to be proactive. And so we based on the projections, our plans and so on, We think that we've been in 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, we clearly we want we are targeting to have a buffer. We expect So probably we think that considering the extremely safe and conservative business model for the bank, we expect and Considering the nature of the debt leverage ratio we are producing, we think that to remain in a region of 2.5% We think it's a reasonable target level for Fideco. Thank you. If I can just follow-up. When you mentioned about the pre agreed price for the trademark, Can we take the carry value of UniCredit that is slightly over €90,000,000 as a point of reference for the valuation? No, no. So the stock options are definitely It's at a much lower level. Okay. Thank you. Thank you very much. The next question is from Roberto Bernardi with Cventis. Please go ahead, sir. Hi, everybody. Just two questions. First, I'm curious, Why now? I mean, who are the promoters of this kind of deal? And the second question is, if you intend to sell back The bonds to Uniqredit, should you find an easy alternative in terms of capital consumption? Thank you. First of all, why now is that you have to move these questions to credit because clearly, We yes, the entity that is in control of Fineco. So I cannot give you an answer at this point. So probably Tomorrow, we are going to have the presentation of the unit results, and there is an Thank you for making some questions to UniCredit regarding the timing and the decision to move in this kind of direction. And then second, clearly, there is we have the arrangement. We have no interest In the case, we Fineco falls outside of the group. Clearly, we thanks to this kind of a prayer breed arrangement, We have no any specific interest in selling back the unit traded bonds because thanks to this pre agreed arrangement, Feneco is going to be in a Great position because we are going to have an incredibly safe and robust Balance shifted because thanks to the collateralization, the exposure to the unit based bond is going to be almost entirely The risk, at the same time, we are going to keep on enjoying an interesting net interest income because clearly, as you know, The consolidated bonds are characterized by gross margin that is above the prevailing conditions we have on the market. So It's in the case we have this transaction moving in direction of making Fineco falling outside of the group. We are going to find our setting in extremely profitable position. So there is no reason that we have to take any other alternative actions. Okay. Thank you. The next question is from Ana Ramo 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 intergroup exposure related to UniCredit, not just the bond portfolio, which is currently excluded from the calculation of Finneco leverage That's my first question. Secondly, have you already received a green light from the ECB and the Bank of Italy in relation to these transitional agreements? Thank you. So regarding the overall exposure, it is €11,000,000,000 More or less, it's €11,000,000,000 Regarding the clearly, all these the recent arrangements Rich, you indicated at Fineco, we had some there's been some Discussion and meetings with the regulatory bodies that had the opportunity to have full visibility on this profit revolution. And we didn't get any didn't raise any Kind of a specific concern on the structure of this potential deal. Thank you. Yes. Good morning, everyone. A very quick one about the timing. When will the financial collateral be given to Finneco by Uni 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. So this agreement is going to be put in force As soon as we have Fineco falling outside of the group, and so 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 In the next few years or never. We don't know, so clearly. And so immediately as being explained In the press release, we received a prior agreement that is going to put Unifredis in a position To take all the for them best decisions in their best interest, Considering also short term actions, but we don't we have not thought of timing. Clearly, the only thing from which we are Sure. That immediately after that there is a transaction that is creating the conditions For having Fenech outside of the group, immediately, we are going to have the collateral in place. And so this is not going to Going to leave the capital position of Fineco completely unchanged. Clearly, we don't need to go through any kind of Capital increase or change in our approach in our dividend policy or something like that and so this is the frame. Yes. Thank you. The next question is from Filippo Bini with Kepler. Please go ahead, sir. Yes. Good morning. First question. The first one, is it mandatory for you to break back the bond? And the second one is on the EUR 7,000,000 of AT1 already on your balance sheet. This bond implies a Vision for real redemption, I mean, ahead of June 2023 in case of change of control of Finnacom Regarding the so we have no Any stringent obligation of buying back the brand, the trademark. And clearly, because we have an I want to remind you that we have an agreement that remains in place That is the journey in place also indicates we fall outside of the group that is giving to Feneco the possibility to Keeping on using the brand for free until 2,032. Clearly, there is also We have an additional opportunity to route the exercising of the deductions of buying back Before this date, the brand and considering that Particularly for the most immediate and date, there are different conditions At which we can exercise these options, there are opportunities, they are not They are not expected to cause any kind of impact significant material impact on our capital position. This is an absolutely interesting option that we have on the table. Clearly, we have not Taking any decision because again, this is something that is going to be related to the in the case We have Fineco Folly on the side of the group. If we had this happening, we are going to decide that we feel that Both the 2 alternatives are absolutely interesting for us, both going through a short term exercise Of the option for keeping on a running bank until 2,032 without paying nothing. So Sorry, I didn't say. So the point is that the trademark is not going to be absolutely an issue and is not going to create Now regarding the VAT reduction, no, there is no clause That they are imposing to us the redemption of the previous issued AT1 in the case we fall outside of the group. Thank you. The next question is from Luis Isabella with Equitasim. Please go ahead. Yes, good morning. Just one very general question. Which are the main operating risk do you see from the And what will change for you on a strategic point of view in case of total exit by unit budget? We can expect An acceleration of what organic external growth? And generally speaking, looking at your future strategy, How much is important to have shareholder like UniCredit then for example, private To implement your strategies, how much is important? In the case we fall outside of the group, We don't expect any significant change in what we are doing. Because I want to remind that Fineco because this has been a choice Taken by the group many years ago, Fineco has been also for the listing and an independent company. So that so this means that we it's a long time that we are running our own IT and operational platform. We have our home brand, our marketing strategies and so on. And after the listing, this has been even more reinforced. So In terms of so nothing is going to change. Fineco 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. And so we don't expect that. Clearly, we are not going to change our strategic direction. So the base is going to remain concentrated on organic growth Because we expect it to keep on growing extremely robustly, I want to remind that you will pay differently from strategy pursued by other And European Banks, where we there has been in place any kind of commercial agreements Between Fineco and UniCredit, so Fineco has been used to compete against Unitiated Bank, the same way we were competing against all the other Italian banks The same has been for Unicredit Banca in regard and respect to Fineco. So we are Also from this point of view, the clients are coming to Fineco, clients they are directly coming to us just because they are interested in having In relation with Fineco, so it's not that there is the same business model, for example, like the comment in which on the right It's the digital harm of the group, and so this is not the case. From an operational point of view, the most part of the activities run by Fineco, they are Incorporate by full independence, the only real very important to fix That were related to the access to the ATMs, the next of ATMs of group and the branches. And based on this agreement, this is going Fineco is going to have the possibility to have access The ATMs network and branches for the next 20 years is a period of time which probably we can expect Probably some structural changes in the behaviors by clients and so on. And so we think that we are going to make us He does in a very comfortable position for managing the cash and the clients and so on. So we our story is not going to change. What we continue doing is business as usual. And What clearly is extremely important was extremely important to be sure that in the case, the company is going to move in the direction For a disposal of the stake making the Fineco falling upside, really, this is not going to have any impact on our liquidity, Capitala and P and L Position. Thank you very much. Mr. Kopy, there are no questions registered at this time. So thank you. So now we can move in the ordinary Part of the presentation, so related to the Q1 results. So if we move to Slide 7, so the adjusted net profit in the Q1 of 2019 up €63,600,000 plus 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 Quarterly comparison is affected by some effects covered in the first quarter. We will deep dive on them in the following slides. Generated BRL 158,200,000 of adjusted revenues The quarter up 1.3% year on year, supported by investing and banking area, while brokerage was affected by low market volatility. We have been the comparison affected by this effect and write backs on financial planners' incentives In the last quarter 2018, net of these effects, adjusted revenues would increase by around €500,000 Quarter on quarter. Operating costs stood at €65,300,000 plus 2.6 percent year on year, mainly due to a different distribution of marketing cost as they are More effective in the first part of the year. Regarding part, this means that we are not going to change our marketing budget. They remain exactly the same with respect to last year. The only difference is that there has been a different distribution from So we spent more in the Q1. We are going to spend less in the second part in the second part of the year. On this point, we confirm our guidance on marketing costs around €20,000,000 Net of this effect amounting to around €100,000,000 operating cost would be flat year on year. As usual, the 1st month of the year were affected by some seasonality, such as financial planners, social security contribution. So not particularly relevant in maintaining the operating portfolio. Net of seasonality affected And of the above mentioned difference marketing cost distribution, operating costs should increase by around 2.7% quarter on quarter. Krastica Mater, 41%, well under control despite the continuous expansion in assets and clients, thanks to a strong operating leverage and to the development. Please go through the following slides to analyze more in details all the dynamics of our Let's start with net interest income dynamics in Slide 8. Net interest income increased by 2.1% year on year, supported by strong volume growth, Both high quality lending and sticky side deposits, even more valuable given the current remuneration volatility 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 1st quarter of 2019 to 1.26 percent in the Q1 of 2019. Cost of funding remains very low at 5 basis points due to deposits in foreign currencies. Please let me remind that our cost of funding related to deposits in euro, which represents 97% of our total deposits, is 0. Quarterly comparison, mainly affected by these effects amounting to 1,400,000. 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 Unitiated Bond portfolio and moving to 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 Sovereignation Entrance. In addition to Italy in addition to Italy. Moreover, our non portfolio 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 Fineco falling outside of the group. And in the case and for this reason, in the case we have we are going to have In place the collateralization of the affiliated bonds in liquidity accounts, clearly, we are going to experience in that kind of case A massive decrease on our Italy exposure. And so this means that we have room for increasing a little bit more Our exposure to Italian gold is to give you a more precise number. At the moment, we have an overall €3,900,000,000 of your Italian Got it. Probably in the case, we have the events of Fineco falling outside of the group And having the collateralization of the limited bonds in place, in this case, we can expect by 2020 to have an overall exposure Italian gold is in the region of €5,000,000,000 So 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 Fineco balance sheet massively derisked, 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 February shift of 100 basis points would generate BRL113 1,000,000 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 Q1 of 2018 to 68% in the Q1 of 2019 And thanks to the new asset management company. Let me highlight once again that our investing fees Strongly sustainable as for most represented by recurring fees. Entry fees only weigh Around the 3% of investing revenues. And our business model does not rely on them as they are not aligned With the interest of clients, but we are just in 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 Q1 of 2019. The quarterly comparison was mainly affected by write backs On incentives to financial advisers in the last quarter of 2018 with an impact of €3,600,000 And these effects in the Q1 of 2019 with an impact of EUR 4,600,000. In addition, as previously mentioned, Q1 2019 was characterized by a very low market volatility. Trading income positively impacted by Visa valuation quarter on quarter. Net interest item, adjusted trading income We increased by 6.8% compared to the last quarter of 2018 and 35% on a yearly basis. Decreased excuse me, the adjusted EBITDA will decrease by 6.8% compared to the last quarter of 20 17 And by 35% on a salary basis due to the new ESMA regulation in place since the second half twenty eighteen. In the current environment characterized by higher regulation and low market volatility, Clients are moving more and more towards multicurrency and are turning into listed products. Let's remind that our focus is already well diversified between over the counter and list of products, I think as in better position to meet the evolving requested times. Please note that we are setting up new products and solutions To offset growth, the effect of higher regulation and the possibility of a market characterized by prolonged Slide 11, on cost. Let me remind that as mentioned on Slide 7, total operating costs in the Q1 were affected by Given distribution of marketing costs among the quarters, as they are more effective in the 1st part of the year. 2nd, The usual Q1 seasonality related to higher financial plans, social security contribution, such as Enazarco Association and FIA Termination Compensation Fund as the payments are subject to a yearly cap. Because of these effects, printing costs would be decreasing quarter on quarter and would be flat year on year. Staff expenses were up €21,700,000 in the 1st quarter, 5.5 Percent more compared to the Q1 of 2018, mainly due to the increase of the workforce Related to the business development, costs related to Fineco Asset Management not fully placed in the Q1 of 2018. Non HR cost at €43,600,000 plus 1.2 percent 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 cost would decrease by around 3.3% Q3 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 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 digital analytics. This translated 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 customer base of around 25 basis points, much lower 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 €918,000,000 as The end of the Q1, average loan to value and total outstanding at 52% And average maturity at 19 years. Personal loans grew 15.6% year on year with very attractive margins. Loan ad loans exceeded €1,000,000,000 in March 2019, increasing by more than 45% in 1 year, thanks to the new credit format. We confirm our guidance for 2019 on mortgages A new production of around €350,000,000 as we prefer not to compete against the system in red zones Characterized by aggressive prices, high loan to medium and longer maturities. Personal loans, New production of around €250,000,000 per year. On credit number, we expect around €500,000,000 annual growth. Slide 14, capital ratio. Fineco confirmed a 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 of 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 Hence the expansion in new inflows, we gathered €28,400,000,000 net sales since 2013, Leading capital financial assets above €74,000,000,000 in the Q1 2019, guided products increased penetration rate of 68% from total assets under management from 67% in December 2018. Jumping to Slide 18. Out of €1,700,000,000 of net sales, Q1 of 2019, 88% was organically generated through the existing financial planners or directly to the bank And 12% come from recruits made in the last 24 months. For 2019, we expect robust net inflows driven by structural trends and by the high quality of our proposition. The recent launch of some brand new products and services Such as Plus and CoreTarget 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 would skip directly to Slide 21. That is the shareholder's value. As you know, sustainability and healthy growth are at the heart 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, addressed by pressure on margins, Lower expected returns and demanding regulation. We strongly committed in achieving the highest shareholders' 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 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 0. 2nd, fairness and respect to both clients is the right motive In our day to day activity, as the relationship with our clients is the most valuable asset we have, keep translating to sustainable fee structure And organic growth is the main engine of growth. Our investing revenues are mostly recovering with just 2% upfront on total investing fees and nonperformance fees solid capital position And finally, in addition, a deep internal agriculture allows us to leverage on 13 Edge Technology, Difficult to replicate and leaving our operating leverage unmatched in the banking system arena. This allowed us We have a highly scalable low risk business in terms of growth opportunity. Moreover, all the above mentioned hazards lead to high quality of recurrent and profitable profitability over the cycle, Let's now move on Slide 3 Related to Finic Asset Management. Finic 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 Activities for 2019 with regards to procedures, Feneco Asset Management is actively working on improving Product efficiency and optimizing existing funds or funds. For this year, we work to further improve operational efficiencies. With regards to some advised funds, new 31 strategies equal to 78 new housing were released In 2019, the offer will be released. And in 2019, the offer will be enriched Through partnership exclusively dedicated to Fineco clients, the transformation of underlying assets with insurance broker is concluded. Finally, the first 9 Fineco Asset Management building blocks were released, and the new passing strategies are now available. In the first half twenty nineteen, more than multi thematic funds will be launched. And Fineco, as I mentioned, will be working Moving now on Slide 33. On this slide, a quick update on Fimeco U. K. In Patent Box. In U. K, we acquired about 3,000 400 clients With a very interesting mix, 57% is represented by non Italians, of which 42% net breakage. Considering the steady level of revenues constantly generated, we now started a second phase of this initiative With more boost in marketing and commercial activities. Aiza and Multi Brand Funds are now under implementation And expected within the first half of twenty nineteen. The company is out 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 trademark. Fiscal benefit will cover 5 years From 2015 to 2019, intellectual properties are renewable according to international guidelines. We are confident to close the agreement with Italia Fiscality by year end as the deadline for the 5 years validity of the normal expires in 2019. Alternatively, we can exclude, consider the option To self determine Patent Box benefit as set by the decree in Credo Preciita Group in April It's 23, 2019, and according with the further implementation details that should be provided by the tax age increase Within 19 days of the approval of the decree. Let's now move to Slide 34. In the second half of the year, we will start on preparing the launch of 2 brand new platforms It will be available starting from 2020, and that will further strengthen the productivity of the bank. Istetto will be the 3rd revolutionary step in the history of our bank. Leveraging on our internal infrastructure and best in class technology, We are the only one player able to combine cyber adviser approach with deep data analytics. The new platforms An additional step that will allow us to deal with pressure on projects by further improving productivity. They will help us to better exploit the potential growth of assets and clients, at the same time, better serve them. Let's now move to the next slide for more details. The assisted selling platform will be an evolution of the Ixnet platform, which will be further improved with clients' financial gaps in the financial adviser front tender. The bank will then provide a tailor made solution to have the financial adviser solve the financial gaps of the clients. This will enable the financial advisers 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 Thank you for your time. And now we can open the call to questions in the for this second section. The first question is from Gianluca Ferrari with Mediobanca. Please go ahead, sir. Yes. Hi. Only one question, Alessandro. I spotted from Assurity numbers that out of your EUR 680,000,000 net inflows In Q1 in asset management, the vast majority is classified as insurance. Now assuming that most of those products were so called multiramu, Can you give us the percentage of life traditional of Ramo Primo out of the EUR 680,000,000? Thank you. In the multi guano, the percentage is in the region probably In the region of 40%. Okay. So out of the EUR 680,000,000 total inflows in Q1, probably EUR250,000,000 EUR 300,000,000 went in In Fuse Bharate, is that correct? Yes, yes. The next question is from Elena Perini with Bank of America. Please go ahead, Elena. Yes. Good morning. I have four questions. The first one is on the trend of net inflows in In April, have you seen a recovery in assets under management or Clients are still largely moved by a cautious attitude. Then management fees, The year on year progress we saw in the Q1 could be considered as a proxy For a trend of the full year, considering increasing contribution of some. Then on brokerage, I was wondering whether The level of revenues recorded in the Q1 could be considered as a run rate for the following quarters, 2. And finally, on lending. As regards to the cost of risk where we see a positive trend reduction trend, Could we expect it to be lower in the full year compared to the full year 2018? And always on lending, I was looking at the Slide number 13 on And I saw an expected yield of 80 bps to 85 bps. While in the full year results, if I am not wrong, you provided an expected yield of 110 bps. I was wondering if you could elaborate a bit on this difference. Thank you very much. Excuse me, let me start from the infos plan. So the piece of attention is not on the Asset under management is from the beginning of the year, we had an absolutely decent mix. So because the bank has been able to We're quite effective in driving clients in asset under management products. The point of attention is clearly that the Clients are maintaining a cautious approach. And so this means that they have a preference for more conservative solutions We are characterized by an immediate lower profitability. So for example, when we are talking about the accumulation products, The product that the clients are accumulating progression from the Ramo premium to the equity funds, clearly, the profitability Thanks to the increase going forward. So we don't expect any We expected the positive trend in terms of appetite of clients for us to deliver major projects to continue. So We remain confident that we'll be able to achieve better results expected last year, but probably with a more On the management fees, clearly, we expect an increase, clearly an increase because we are going to have In terms of volumes, clearly, we expect a growing contribution by Finneco Asset Management. And 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, the pressure on margins, it keeps on building up. But overall, we expect a Continuation of the trend of increase of the management fees on for the bank. Regarding the revenues, no, you cannot use the results of the Q1 as a kind of Of runoff, clearly, we expect a higher level For the next few quarters, clearly, assuming that we have no any dramatic or significant disruption in the market, but Assuming the situation relatively stable, we expect that the running pace is going to be higher We expect what we experienced in the Q1. Also, I want to remind that the Q1 has been, we think, Quite remarkable quarter because we had several quite I think it starts, so there are all the present marketing expenses and the highlight for a seasonal point of view. And particularly what is my opinion is the in the cultural tension is the volatility. The volatility on the market It's been incredibly low. If you move to reading the presentation, Page 10 of the presentation, There is on the at the bottom right of the slide, there is this is a very it's a much more precise graph On volatility of the market because it's the volatility reduced by the futures market. So that is related to the Most relevant markets in which our clients are working. As you can see, there has been quite interesting pickup, Volatility at the end of the year, and this clearly has produced quite decent results. And at the moment, the volatilities that we see at the rock bottom. Nevertheless, so putting and considering that we the results clearly have been affected, but it's very low level of volatility. In any case, The results of the bank has been has remained on the growing trend and without taking any kind of a 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 auction products to be able to syndicate the volatility remains Let's see now to have better results in respect to what we experienced in the Q1. Thanks to the Thank you. 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 the expected figures. Clearly, the equal to cost of oil is absolutely. And progressively, This is embedded in the forecast in the expected risk we are So we expect that this trend policy to continue, but we prefer to remain cautious. And so we are giving as a guideline a cost of risk of 25 basis points, but clearly, we cannot exclude it can go And regarding the heels on the loan back loan, Clearly, 110 basis points yield is related to the full loan book loans. And not only the credit limit, the credit loan, but the new credit loan has an expected yield and it is a region of 80, 85 basis points. Okay. Thank you very much. So considering that clearly this is the fastest growing, The company that is growing the most, probably we can expect a slight decrease on the overall yields on the overall Many thanks to all of you. As usual, if You still need to have some follow-up in our presentation also related to the press release We will be together with the details and the results. Please don't hesitate to call us to arrange again an indicated call with our team. Thank you very much.