Okay. So thank you to be here for this presentation of the results. I will make a short introduction to these results, And then Nicolas will detail the figures for you. We are really satisfied with these results and for 3 reasons. The first reason is the fact that When you look at the results, they are in line roughly of what we have announced in our 3 years business plan, which has been presented here at the beginning of 2018, in line with the net income, slightly above.
We announced in the plan, an average increase of the net income of 7% per year, and we are at 9%. In line with the cost to income ratio, we had said under 53% and we are 51%. And just a little bit under relating The target of AUM, it was €50,000,000,000 And we have registered €42,000,000 this year. And the fact that we have been able to be in line in the context of a difficult market, difficult environment, which was marked by 2 main features: a decrease on the valuation of all asset classes or nearly all asset classes during this year. 2018 has been the mirror of 2017.
2017, all the asset classes were up. In 2018, all the asset classes were down. That means that capacity to generate absolute performance, which is more difficult. And the second is volumes. The market, the global market for UCIT funds in Europe was an amount of inflows, of net inflows of €800,000,000,000 in 20 17.
And this year, it was, to be simple, nearly flat. And to have been able to generate this results show, and that's my second reason of satisfactory, the solidity of the business model of When you look at our results since the creation, each year, we posted net increase in net income, and it was in good year and in bad year. And this year, it was again the same. And it's a result of the solidity of our business model, the diversification between different expertise, passive, active, monetary and the structured products real estate. Diversification by client segment, retail institutional diversification by geography.
And this year, you see that net inflows were at 100% coming from outside France and especially from Asia. And concerning this level of activity, for me, there is a figure which is very in our industry, which is a ratio between net inflows and AUM. For Amundi this year, it's 3.2%. And when I look at the asset managers, which have released their figures, it's nearly 0, okay, that means that our we have been running faster than the than the others. And it's also more remarkable that during this time, we have done the integration of Pioneer.
And we can really say now that it's a very big success, a tremendous success. When you make an acquisition, the first point is to make no mistake about the quality of what you are acquiring. And with Pioneer, the quality was excellent because we were reinforcing our business model, our industrial model in three dimensions, which were which are distribution capacities, expertise and talent. But the 2nd key parameter to be successful is to be able to execute, to implement the merger or the acquisition successfully. And that's what we have done.
In 18 months, we have fully implemented the merge, decreasing the staff, realizing all the merge of legal entities, transferring all the operation of Pioneer from Aladdin, the IT of BlackRock, to Alto, the software of Amundi and without any operational problem. And that's the reason why we now are saying that the amount of synergies is higher than announced. We announced €150,000,000 of course, synergy per year. And we will deliver 175. And so the amount of synergies is higher.
And the pace of delivering in the income statement this synergy is also faster In 2019, nearly, the totality of the synergies will be in the income statement and it was phased differently in the past. So a year which is a major in the strategy of development of Amundi. We have implemented this merge. At the same time, we have began to reinvest part of the synergies, new additional teams. And I'm Wendy is really ready to accelerate its pace of development for the coming year.
We are now all turn only to business and not more to integration. And that's the reason why also to a question yesterday evening of news journalist, we said that the central objective of our plan is EUR 1,000,000,000 Net income, I say EUR 1,000,000,000. For me, the income, this parameter is a key parameter. After net inflows, cost to income, it's 2nd. And we confirm this with the assumption that we will be at the same level of market than we use at the time of the plan.
So not we're not seeing the present market, but the market at the time of the plan, okay. You remember that at the time of the plant, the assumption was stabilization of the market at the level of the beginning of 2018. That's the word that I wanted to tell in introduction. And so now I pass the word to Nicolas.
Thank you very much and good afternoon to all. So I would start with a little reminder about the market condition in which We operate, I think you all know well, but it's important to remind what it was. And 2018 was, from this point of view, a very special year. It's a year where almost all asset classes delivered negative absolute performance. And it's basically, it's a reverse from what happened in 2017.
And it's the 1st year since the big 2007, 2008 crisis that it happened. Particularly noticeable, of course, for Equity Market. I remember we had the first market correction around February or March last year, then very volatile market. And then last quarter, sharp Decreasing all basically all world index market by 10% to 15%, depending on the market. At the same time, interest rates remain low.
So again, negative market context in the sense that you have absolute performance negatively for almost asset classes. So waiting, of course, on our capacity to on the asset management and our revenues, but also waiting on the capacity to generate performance fees of financial revenues, but also leveraging our capacity to have inflows in this context, market So risk aversion wise significantly, and it's clearly visible on the following Slide, you have for the whole European market inflows in 2017. 2 elements. First one, as Yves indicated where we had in 2017 more than €800,000,000,000 of inflows for the full year. For the full year in 2018, it was only around €60,000,000,000 So a sharp decrease, first element.
And second element, The inflows we saw in the market last year were all concentrated in the Q1 of €150,000,000,000 Then following the first The market correction flows that became, let's say, flattish for the 2nd and 3rd quarter and a significant out close to €90,000,000,000 on the Q4. So Market environment has clearly weighted on the appetite from clients for asset management products. In that context, our M and D did perform. Our total asset management remained basically stable between the end of 2017 and the end of 2018 at EUR 1 €1425,000,000,000 with, on one side, positive inflows of €42,000,000,000 and on the other side, Negative market impact of EUR 43,000,000,000 And what is clearly noticeable on this graph is that the inflows were mainly concentrated on the 1st quarter, in line with what we saw on the market, where the negative market impact was very strong on the last quarter, in line with the decrease in basically all equity markets. So to comment a little bit more in detail on the inflows, EUR 42,000,000,000 of total inflows, a good level of inflows, Of course, lower than what it was in 2017.
That was a very positive year with a very Favorable market context. You can notice on the graph that the decrease in inflows came mainly from treasury funds, meaning that on the long term asset, we had a very good level of activity overall over the year, EUR 36,000,000,000 more or less the same level as in 2017. 2nd element, most of the inflows continue to be driven by retail with especially a good contribution from the JVs. But our 2 businesses, these are positive inflows, €26,000,000,000 for €22,000,000,000 for retail and a little bit more than €11,000,000,000 for institutional. If we go a little bit further in these two segments.
1st, on retail, strong net inflows over the years, but of course, with a slowdown at the end of the year, Again, the backdrop that I already mentioned, increased risk allocation in Europe. So if we go business line by business line, very Strong very strong inflow momentum in our Asian JVs, primarily in China and India. And if we look at the rest of the business, in the French network, we saw inflows that stood well and were resilient Mainly concentrated on long term assets. So positive inflows of close to €3,000,000,000 for the year. It's around €4,000,000,000 on long term assets and which remain positive in the Q1 despite the environment I mentioned.
Regarding international networks 3rd party distributors are currently more sensitive to the sorry, more sensitive to the market context with some outflows on the last quarter. But overall, on the year, they continue to deliver a positive performance on the 3 a bit more than €3,000,000,000 for the distributors if we exclude the exceptional one offs and The termination of the Fineco mandate that we already mentioned that happened in July last year. And for international networks, close to €5,000,000,000 especially with our new partner in Italy, Unicresi. Regarding Institutional and Corporate Business Line, here also strong annual inflows despite the outflows we posted on 2 significant mandates at the end of the year. And what is interesting is that inflows were concentrated on long term inflows.
It's true for industrial and sovereign mandates, a bit more than €12,000,000,000 on inflows. And despite these 2 significant these 2 terminations mandate at the end of the year that represented around €6,000,000,000 For corporate, you have, on one side, significant outflows on treasury But on the other side, a good level of activity on long term assets, mainly coming from our activity with Corporate Functions France, where we continue to develop and attract new clients all across Europe. And finally, regarding employee savings schemes, a good year, EUR 2,700,000,000 of inflows in 2018 compared €1,000,000,000 in 2017. So it confirms the strength of this business line where we have a very strong position in France, our more than 40% market share and which, by the way which potential, by the way, will be reinforced by the in the months to come. Regarding asset classes, as Yves already mentioned, the Good thing is that first inflows were concentrated on long term assets and were driven by all areas of investment expertise.
So we had positive inflows In multi asset, significant like last year in bonds but also on equities and even more than in 2017 or in structured on a wheel asset products that also are developing rapidly. Last but not least, activities seen from a geological point of view. You can see here that it's More than 100% of our inflows came from outside France, with, of course, a strong contribution from Asia coming mainly from On joint venture in China and India, but also good level activities in Hong Kong or Taiwan, for example. Solid inflows also in Europe, in Italy, but also in other European countries such as Germany, Netherlands, Spain. And in France, we have net inflows slightly negative, but it's on one side a good level of activities for long term assets, on the other side, outflows on treasury products mainly coming from corporate clients.
Before moving to the net results, maybe one a short focus on a few, I would say significant growth drivers, that has been growth drivers for the last year, but still this year. First one being the development of the passive and smart meta activities, EUR 14,000,000,000 of inflows in 20 So very good level of activity. And for example, on ETF, close to €4,000,000,000 of inflows and positioning for M and D that move from the 6th from the 5th, sorry, to the 4th position as an asset in terms of assets in Europe. Also a good contribution from I already mentioned it from Real assets. And despite the fact that we still had at the beginning of 2018, So it's a lot outflows coming from the front of headcount activity, which was in runoff.
Now this activity and so these outflows are over. So despite that, we have a good level of activity for Real assets overall driven by again by real estate, a bit more than €3,000,000,000 inflows in 2019, but also by private debt and private equity where we had €1,600,000,000 of inflows over the year. Amundi Services, which is a way for us to expand or present on the value chain and benefit from The capacity, administrative, operational activity that we developed internally. So our muni services is continuing to develop, attracting New client, close to a bit more than 20 new clients onboarding during the year with especially 2 significant ones that we already John Finnico and Goldman Sachs. And finally, I already mentioned it, I hope the agent, the Virgin Ventures continue to deliver a very strong Contribution to our results in activity, 1st, but also in terms of results, with a global contribution to our P and L reaching EUR 50,000,000 and increased by 50% compared to last year.
So we clearly now are in the phase where the growth of the activity in digital ventures is translating in the growth of the contribution of their contribution to our net results. So a good transition to present our results. As he mentioned, our Bottom line, pure bottom line, accounting net income increased by a bit more than 25% compared to 2017, benefiting from, of course, the integration of Pioneer, which was, if you remember well, consolidating in mid-twenty 17, but also from the own business momentum of the business. That's why, as you know, we also present our numbers on a pro form a basis, combined on adjusted net income, which reached €940 €6,000,000 in 2018, an increase by 3% compared to last year. But If you exclude the exceptional financial revenues posted in 2017 and linked to the acquisition of Pioneer, where we released capital gains on our investment, it's an increase by a bit more than 9%.
So it's above the target that we gave to ourselves in average for the 3 years in our 'twenty plan, which was in average 7% earlier. So where does this results come from? 1st, revenue. If you look at the total revenue, you see a decrease by 5%, but you have to take into account the fact that there are, of course, a very unfavorable basis of comparison for financial revenues. As I said, 2017, an exceptional level of revenues coming from this capital gain, where in 2018, due to the market context, the yield of our investment portfolio was Slightly negative.
And since we are in since the implementation of IFRS 9 in mark to market valuation, an impact on our P and L, negative impact of €24,000,000 So if you exclude the financial revenues, Our management net asset management revenues stands well. They are almost stable at EUR 2,606 €1,000,000 This to this thank you. This is well because the management These are up by close to 2%. So that the total of total management revenues, excluding performance fees, increasing by 1.9%, to be exact, with in line with the increase in our activity. You can observe there's a slight decrease in our average blended margin.
Where does it come from? The average margin of our main The segment of activities are continuing to see a slight decrease year after year, which is not a surprise, something that We are seeing for a long time, which is due to continued pressure on fees in a low interest rate context. So this is continuing, and this is partially but only partially offset by an improvement with the mix, Improvements coming from the business mix. We have a relatively good level of inflows in retail, Almost no inflows under insurance mandate, which improved slightly the mix. But since this year, the overall inflows were a bit lower than expected.
That explains why the average blended margin is slightly decreasing. But bottom line, net management fees are still up by close to 2%. Regarding performance fees, they are, of course, clearly affected by the market context. So they amount to €115,000,000 of course, a decrease compared to 2017, which has On the opposite side, an exceptionally good year in a very favorable market context on where we reached EUR 180,000,000 So overall, net asset management revenues that are almost flat. On the other side, costs are which are significantly down by 7% compared to 2017.
This is clearly the impact of of the synergies linked to the integration of Pioneer. As you mentioned, The integration of Pioneer is working well. We'll be delivering more synergies that we initially we expected, €175,000,000 and not €150,000,000 as we expected. And as it is implemented faster than expected, it's delivering it is they are delivered at a faster pace than expected. So today, in 2018, we have already €110,000,000 of synergies visible in our P and L.
So that's the element that explains the strong decrease in synergies despite the fact that we had, for the 1st year in 2018, to account P and L's impact of external research following Michelin, we already forgot it. But 1 year ago, was a lot of question about it. We managed to absorb this cost. And despite the fact that we started also to and partially reinvest part of this synergies in in a focused investment to nurture future growth, for example, reinforcing So consequence of revenues that Stand well on the significant decrease in cost. Our costincome ratio decreased once again and reached in 2018 71.5%.
So it decreased by close to 1 percentage point compared to 2017. If you add the contribution I already mentioned from the JVs, including by 50% and the reduction of our average Tax rates, which is in particular due to the tax reform in the U. S. That explains the increase of our net income by 9%, excluding the exceptional financial revenues posted in 2017. Maybe one quick word about the Q4, which is basically in line with what I mentioned, which in terms of revenues is particularly impacted by negative revenues on financial revenues.
As you know, Most of the market concentration most of the market correction was concentrated on the 4th quarter, so impacting on financial revenues significantly in 2000 during the Q4. And performances were trending much lower at the end of this year than at the end of 2017 when they reached very high level of €80,000,000 So if you exclude this element, you can see that management Fees are only slightly decreasing compared to 2017 due to the market impacts and costs are significantly lower, which which allow us to post total adjusted net income of EUR 225,000,000, a good level considering the low level of To conclude, a word about dividend that will be proposed to the General Assembly to be held on the 16 May, in line with our commitment, which was to 65% of our net income excluding integration costs. The dividend that will be proposed will be €2.9 per share. So it corresponds to an increase by 16% compared to last year dividend. And based on the last Tweak value of the stock, a yield of close to 6%, 5.9%, to be precise.
So very attractive, we believe the dividend policy. Before I conclude, maybe just one word about not the direct link, of course, with the activity and the results of 2018, but within an important element of our identity and or development, which is our commitment and our actions regarding responsible investment. As you know, responsible investment has always been one of the, I would say, the funding principles, the funding pillars of Amundi since creation and based on several complementary approach. So first one, of course, is applying ESG criteria to our investment policies in addition to traditional financial analysis. So for that, we rely on dedicated teams screening more than 5,000 issuers and which allow us to build a portfolio that take to account this criteria in addition to financial criteria.
The portfolio managed according to this approach Today, €270,000,000,000 And this approach has already been complemented by targeted investment targeted investment approach dedicated, for example, to climate change and finance On the Energy Transition, they represent close to €10,000,000,000 today. And also support for social and solidarity economy with a dedicated fund around €200,000,000 Going forward, our ambition is to, I would say, develop and generalize this approach with several commitments that has been presented a few months ago for the 3 years to come. First one is to basically generalize It includes on the ESG factors in our investment policies and the management of our funds as well as Generalizing also our voting policy based on the factors integrating the exiting of all the asset, the corporate in which we are invested, so basically to make progressively The responsible investment completely mainstream at the same time has continued to develop specific initiatives dedicated to in particular to the environment, to climate change as well as to continue to develop our to Social Enterprise. So to conclude, just To repeat, globally, a good year, continuing a market environment that progressively become more and more difficult during the year. Basically, we managed to continue to post a good level of inflows and to more than compensate the negative impact of this Environment on management fees, performance fees, financial revenues by a stronger cost control on delivering of synergies better than planned.
So going forward, it put it allow us to remain fully confident to continue to develop and to benefit from what we believe is the strength of our model, resilience based on a very diversified approach, whether in terms of geographies, in terms of business lines or in terms of expertise. Thank you very much.
Yes, good afternoon. I have two questions. The first, Yves, I'm interested by the fact that You've put a little bit of a caveat on the target plan about market levels. So the question to you is how comfortable do you think the market levels will be At the level of beginning of 2018?
Recall me which was the market level that you we take into account at
the beginning of 2018. So for equity markets, for example, if we take the CAC forty, it was around 5,300 roughly. And for long term interest rates, European long term interest rates, it was around 0.6% or 0.47%, if you look, for example, at 0.80 lower for the boons or so.
So the worst is never sure. That means that so an idea that CSA 40 in this period remain at quite as a present level, in fact, dollars 5,300 or $5,000 if not so. So difference, I remember you that the impact for us terms of revenues is 10% of decrease. The stock market represents EUR 85,000,000. EUR 85,000,000 We tax.
So this is the assumption. The other assumption also is the fact that which is even maybe more important that we don't enter in a permanent context creating strong aversion to risk because we had the impact of the market about total AUM and the capacity to generate performance fees. But we have also the The impact on the market in volumes. When you have a lot of volatility, a lot of incertitude, You have an increase in aversion of risk and a decrease in the investment in mutual funds. In fact, and you see what happens in Europe this year compared to last year.
And The change was at the end of the Q1 after the correction of the market of February. So that at the same time, I'm quite confident, let's say, to be simple, what I say is €1,000,000,000 of net income. I'm confident with this because, of course, one side environment is more difficult. But on the other hand, we have permanently these new engines of development. For example, this year, We have recruited nearly 100 people, which is a reinvestment of part of the synergies, but which will create additional development in the future.
And one more question for Nicolas. Considering the volatility in your financial portfolio, are you tempted to hedge it potentially Or not?
Well, we look at it sometimes. I mean, it's not a general policy. Sometimes we do it, for example, for foreign FX,
but generally no. On the long term, it's my experience of previous Chief Financial so the officer, the cost of hedging, when you have the long term, is higher than the benefit of hedging. For this kind of capital base and so on. Time can say after if we take, let's say, an option about the CSA 40. We have decreased in the valuations of news, but it's so intelligent, so indicated that generally it's context to disaster.
Good morning. It's Hubert Lam from Bank of America Merrill Lynch. Two questions. Firstly, on fee margin. As you said, the fee margin fell slightly year on year.
Should we continue to expect the fee margin to trickle down on the back of ongoing pressure. That's the first question. The second question is, can you just give a sense what your excess capital position is today? And again, refresh our views on M and A opportunities and what you see out there.
On fee margin, fee margin, it's always a consequence of things there are certain things that we control and other things that we don't control. The first is the mix of the products, mix by expertise, equity versus fixed income, real estate versus monetary funds, by client segments, retail and institutional and investment management style, active and passive. I don't know frankly which will be the breakdown of this in the future. The objective of each head of business line is to go as fast as possible, and then we'll see the effect. There will be a continuing having seen that, there will be a continuing pressure on the margin in each kind of products, both active, passive and so on, for reasons that I have often explained, which is a low interest rate.
But I see that we can resist probably better than other because our prices are right now cheaper than the other.
It's the
case, for example, for ETF, where our brand has been smarter and cheaper. But it's also the case, for example, in France, where we have made recently a survey to compare the prices of the funds, the Amundi funds to those of competitors. We have done this in view of the implementation of MiFID to give to have arguments for our network to discuss with the customers. And the conclusion was that our average price were 20% under the average of the sector. So that means that even if there are additional pressure on the fees due to the competition.
Our present position will, let's say, put us in a better position to resist. So all in all, I see a slight decrease of the average margin, but more dependent on the mix than other factors.
Yes. There was a question on excess capital. I think regarding excess capital, as you know, following the acquisition of Pioneer, we didn't have any more excess capital. So probably, we are and we'll continue to need to rebuild it. In terms of amounts, not complicated.
We distribute 65%. So it's of our results. So it means that we have continued capital by around €300,000,000 a year. So we are just 1 year after. So we can tell you why we started Slightly to build this excess capital, but we are still in the margin, which is probably more something like a buffer on top of the minimal regulatory requirement.
But going forward, yes, we will continue to rebuild this capital.
And to be simple, at the end of the plan, to be simple roughly speaking. We will have, again, without acquisition, EUR 1,000,000,000 of excess capital. And this €1,000,000,000 will be used either for acquisition, if we have good acquisition, or will be given back to the shareholders in the other case.
Arnaud Giblat, Three questions, please. Firstly, on the investments. You mentioned you hired 100 people this year. We have hired, you made investments in 100 people. Could you talk about which areas you're trying to grow?
And what sort of quantum of investments we should be expecting in future years. My second question is on MiFID. Can you talk a bit about your experience On the ban on retro sessions that method put in place in distribution, how has that impacted distribution? Is it Have market share shifted? Has pricing been impacted by method?
And my third question is On Corporate Services, I think from your plan, you're targeting €50,000,000 of contribution from Corporate Services. Can you is that think you can reiterate. And where are you in terms of contribution from among the corporate services? Thank you.
About new hiring, it's not we have hired about 100 people, part of investment side, but it's concerned all the areas of Armani. But for example, In the Investment division, we have recruited a new head for Equity with a guy coming from Nordea, Casper, who is a new ad based on Duplant. In emerging debt also, we have recruited. And but also significant number of people of the commercial side, for example. In the U.
S, we have recruited people to target the Insychelles segment. Pioneer was purely on retail in the U. S. Amundi with Masbrydhan has a small franchise in the institutional side, and we have ambition to grow on this area. About MiFID, it's too soon to speak of the impact of MiFID.
Have in mind that MiFID is implemented this year for France. But for life insurance, the equivalent in France is TRIPS. It's implemented for this year. But for the first Time, the customers will have reporting in 2020. There is one And as you know, in France, most of the funds are sold through life insurance, unique ink products.
I don't anticipate a direct impact of MiFeed. You saw the fact that people see the fees about the funds. I don't anticipate Also a major shift in the market share between the players about this. I think that MiFID also is a way I see the discussion inside the Agricole Group, with the case regional with the distributors to be more conscious of the efforts to do to manage more efficiently the savings of the customers. We have launched a plan inside Credereco Group to change the approach to ship from an approach of product selling to an approach of permanent advisory of the customers.
And the last point, yes, Amundi Services is developing and target of €15,000,000 is totally feasible, in fact. This level today. So but for me, it's an additional I think that My the objective that I give to the people in charge of this, which is not only IT, but also fund listing, things like that, is, let's say, I said the objective in the next 3 or 5 years is €50,000,000 €50,000,000 At the same time, don't add the $50,000,000 that I give them to our projection. It's a way to be more sure to do this projection.
It's Chris Turner from Berenberg. Two questions, if I may. Firstly, you've obviously done very well executing on in terms of the cost synergies and the realization at Pioneer. From memory, you were also Parking €30,000,000 of revenue synergies. Can you tell us where you are on that and whether you also see more room to expand on that?
We will do also this, of course, when we are speaking of cost synergies, it's simple. We know that we can Reduced synergies is more always complicated to identify. But I can confirm you that this Figure will be, as you know, online because I see the additional potential that we are doing. For example, it's beginning that exporting the U. U.
S. Expertise in Europe or in Asia, the potential year and we have begun. I can add, For example, what we are doing with emerging market expertise, which are very successful, for example, in Taiwan. So the combination of a strong geographical presence, we are present in 36 countries and the fact that we have Nearly all the expertise, it provides about probably it will be more At the same time, as we are in a difficult environment, it will be more, but also don't reevaluate, you see, because life is made of good news and some bad news in fact.
Thank you. And then just one last question, if I may, which follows upon I think Hubert was asking, which is, in terms of your geographical footprint, you have some very strong presences in France and Austria and Germany and Italy. In those geographies, We have much smaller presence or no presence. How do you think about entering in? Do we need to wait until your balance sheet can let you do that inorganically?
Or do you look at markets like Spain or some of the Asian markets and see a way of doing that organically.
Well, we are in 36 countries. I know that there is in the world 200 countries, but some, Africa is not mature enough, in fact. Well, If I take Europe and Asia, Middle East, we cover nearly all the countries except Vietnam, Cambodia, Bahamian, but some countries like that. Maybe we will open a joint venture one day in Vietnam because we are working for the future. So we are presenting the countries where we have to be present.
What we have to do is month by month reinforce our presence, our penetration in each of these countries. I take the example of Germany. We are better off Now after the acquisition of Pioneer and Germany, we manage in Germany more than €50,000,000 now. But frankly, we should be at the minimum of 100,000,000 and that's the objective that I have given to the head of the The fact is a woman covering this country. So the problem is not to add more and more countries.
It's to be to have a penetration, more and more important in each country. And we have a specific subject that we have to address. Presently, we have not find a good solution to address this. It's this country, UK, because we are present on investment as an investment platform. But our presence in distribution, even if it's improving, thanks to the efforts of the people of London, I consider that we should do more.
That we should do more.
Thank you. Mike Werner from UBS. Two questions, please. First, on the fee margins of the institutional business, we saw them at around 10.4, I think, for the full year. In your first half presentation, they were at 10.8.
So can we assume that we've seen a significant drop in the second half? Or is there something going on that we haven't seen in that calculation. And then second, if we take a look at your inflows for 2018, excluding the JVs, They were about €16,000,000,000 or so. And you've noted that we've had about €14,000,000,000 or so of euros of inflows into passives. So can we assume that can we make the conclusion that we've only seen about $2,000,000,000 of inflows into active funds or actively managed products In 2018?
And then is there any way to get a breakdown of those passive flows between retail and institutional? Thanks.
So regarding the sorry, regarding the margins in the initial world, yes, they are decreasing. It's not new. It's due to the fact that competition is very strong and that in a low interest environment, to get yield to the clients, You need to propose products, sometimes with lower fees. So it's not something new, something that we have seen for many years and that We basically expect probably to continue. Regarding the inflows, yes, the inflows, including the JVs amounted to EUR 3, I mean, the calculation EUR 15,000,000,000, a significant contribution coming from the passive management.
Also to take into account that we have the outflows coming from Fineco, which are active management and 6,000,000,000 plus to 7,000,000,000 outflows. So it mean and also the last 2 big mandates that was terminated at the end of the year also on active management. So yes, net net active management had a small contribution, but with a good still good level of activity, especially if you include the Finnequality. And it was coming I would say traditional active management, multi asset, equity and so on, but also on from real assets.
But when we are seeing additional, it includes the asset managers, for example, which buy it in fund defense. And at the end, it's retail customer, but our client is institutional.
Hi, it's Gurjeet Kambo, JPMorgan. Just two questions. Firstly, can you perhaps give a bit of color on the U. S. Business?
What are sort of trends you've been seeing in the final quarter, maybe just broadly in 2018? And then secondly, just on the JV contribution, obviously, you've seen a big ramp up in 2018. How does that Move going forward in terms of the scalability of those businesses?
In the U. S, it was a year Roughly is net inflows, where net outflows of €1,000,000,000 Maybe a bit more. A bit more, maybe €2,000,000,000 I would say we were in the U. S. In a transition year in the meaning that U.
S. Market is difficult. The traditional mutual funds, U. S. Market is difficult and see the different in the industry, competitors, your JPMorgan and so on.
But all I see recently the results of Natuzzi's outflows in the U. S. So we have a mutual fund U. S. Market, difficult.
And we have just begun to implement the strategy to reinforce on the institutional side and to export more the U. S. Expertise through the point.
So that's
explained that all in all, the contribution to net inflows of the U. S. Has been is negative. At the same time, they have significantly improved their profitability due to the cost synergies and to a better management. That means that they have improved over 7 basis points of cost to income ratio.
And regarding the JVs, what as I said, what we expect going forward is have a contribution in term of activities and in term of results broadly in line. Of course, there could be some operational leverage, but you have to take into account that this I think all of these 3 JVs already operate at costincome ratios that are, let's say, close to 50%, pretty much in line with MD1. So And what's interesting, some
of the questions on the recent period, archers, we had a difference between the pace of increase of the volumes and the pace of increase of the net income. And you see that this year, the pace of increase of net income is equivalent or even better than the pace increase of volumes.
Hi, Angelique from Autonomous. Thank you for taking my questions. Firstly, when I look at the retail flows excluding JVs, Those were around €4,000,000,000 for the full year. This compares to a run rate of around €20,000,000,000 that you had in the plan. And given that retail flows carry a much higher margin, a much higher fee rate, does that concern you for the future.
And maybe related to that, could you please give us a bit more color on what happened this year with 3rd party distributors because we saw another quarter of outflows. Obviously, the market environment might have affected that, but is there Anything more structural in that segment like MiFIC 2 or something in the U. S. Retail segment? Thank you.
So that you are right in your analysis, and we are not at the level but we'd like this year on the retail, excluding really linked to the context of the market that I mentioned. That after the correction of the market in February, you had a major shift on the market. In addition to the increase in volatility has created a resaleversion and no more net inflows in Europe. There was also another reason to explain this is The shift from American investor, which repatriates money from Europe to the U. S.
Linked to, 1st, the Trump tax reform and secondly, the fact that they consider that the potential of growth of the U. S. Economy was better than in Europe and also that there were less political in certitude in the U. S. Than in Europe.
So it's clearly a concern, in fact, in our plan. And we know that we have to compensate for this. Also, that's the same explanation, in fact. And if you look at the figures of all the competitors in Europe, everybody is the same factor.
The first question comes from the line of Pierre Chedes from BIC Markets, your line is open. Please go ahead.
Yes, most of my questions have been raised. But just to be a little bit Specific regarding what you say that you there is problem in net inflows Regarding the general context, and you say that you will have to balance this effect of this forecast. So what do you have in mind regarding this aspect? And you talk about the market context, It's Albert. You don't talk about the economic context, which is going to be probably a little bit more tough than expected initially in terms of GDP growth, for instance, and also recent events.
So clearly, as an analyst, one part of our job is to make prospects. And We could be a little bit surprised to see that you didn't change any figure of your plan, Particularly regarding net inflows, having in mind that you have reaffirmed That continuing pressure on margin will continue. So at the end of the day, if net inflows, It's more difficult pressure on margin is more difficult. Your cost income is excellent and it will be difficult to lower it Below 50%, I guess. I don't see where you can Now accepting external growth, continue your Or reach all your targets in your plan.
What is your view on that?
No. My view that is the life. Firstly, it's better to be optimistic than pessimistic because you are not sure to be right, but you live better. And the second reason, and I'm looking to my friend, Domenico, have one of my preferred world is a formula of Antonio Gramsci, who is not an Italian Soccer player, he was a philosopher. And I say we need to have the pessimism of intelligence and optimism of the wheel, which is really, as you know, the way we manage.
Of course, you are right. Times will be more difficult. The question of the economic growth is not decisive for us. For us, which is more important is the question of volatility risk aversion. That's The key question on the future and it's difficult to assess like this.
What I'm saying, in fact, when I say, we will roughly I say roughly because I know that now at 1% or 2%, people are very happy to or proud to make projection at 2 years. But roughly, we think that we can do EUR 1,000,000,000 of net profit. Okay. We think like that because we see what you are seeing. But at the same time, we see that we are investing in some areas and that the return is good.
We see that we are able to deliver more productivity gains. For example, the costs this year, benefit from that. And sometime, who knows the tax rate can be better. We have not been used like this. So all in all but what I asked to you, consider that it's, let's say, a target of trajectory.
When I say €1,000,000,000 we are not in the how would you say the piloted automatic? Management is not to pilot a plane, comes out with sleep and so on. So permanently, we adapt. And then there is a difference between of execution. That's the life, sometime between different management.
So all in all, it's I would say in term of soccer, I would say c'est joao, is playable. At the same time, it's not sure. I would say that we should give, as you know, you should ask to the management to give their objective with an interval of confidence. And I will say that at the beginning of 2018, when we give the EUR 1,000,000,000 plus, The interval of confidence was very high. And now it's less high, but it's always manageable.
Okay. Any other questions?
The next question comes from the line of
Can I ask two questions, please? The first one on Slide 80. If we compare this to the same one from your Q3 presentation, it looks as though you've seen €5,500,000,000 of net inflows from countries in Europe, excluding France and Italy. And I was hoping you could give us some more color on the particular regions there or anything unusual happening in Q4. And the second question was actually tax in Q4.
Could you give us some idea why that was so much lower and how we should about this going forward. Thank you.
So for the inflows in Europe, excluding Italy, I would say it's a bit everywhere. It's in Germany, it's in Spain, it's in Netherlands, it's in the UK also, even if we We would like to do better. So it's quite diverse in terms of source of inflows, but I would say significant contribution, particularly in Germany, Netherlands and Spain. And regarding the tax Rates, so as I said, the annual tax rate, the main impact is the tax reform in the U. S.
On the 4th quarter, Don't look too much at the Q4. It's always like at the end of the year, you adjust, you know exactly what is your result country by country and there are adjustments. So The reference one you should look at is the annual one, not the one of the 4th quarter.
Thank you. Thank you.
Okay. So just to finish, summarize, in fact, and in order that things are very clear between us. So what we continue to manage to, it's this €1,000,000,000 equivalent to the 1 EUR 50,000,000,000, that's the sky. At the same time, the objective is here And don't consider that inflows are an objective because in with the time, I would think that Inflows were even more important than net income. No, what the real commitment is on net income.
And inflows, they will depend on the environment, this adverse aversion to risk and so on. But we will be also under we maintain the objective of under 53% of cost to income ratio. Okay. So thank you very much. It's always a great pleasure to see you.
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