Good morning to everybody. To those of you who are in the room, thank you for attending this conference, as well as those connected via webcast. It's my great pleasure, I'm Cyril Meilland, Head of Investor Relations. It's my pleasure to introduce you to our Q4 and full year results for 2003. With our CEO, Valérie Baudson, and Nicolas Calcoen will comment on these results. Without further ado, I leave the floor to Valérie for initial comments.
Thank you, Cyril. Good morning to all, those with us in the room, as well as those connected. I'm very pleased to be here with my colleagues, to present our Q4 and full year 2023 results. And this morning, we will also announce a deal of external growth, the acquisition of Alpha Associates in private assets. So first, I will go through the highlights of the year, and then I will present the strategic rationale and financial targets of this acquisition, and of course, I will then hand the floor to Nicolas. So 2023 was a good year for Amundi, both in terms of commercial momentum and financial results. It was also a year of new developments, initiatives, according to our strategic plan. So I'm gonna start first by our business.
Our clients gave us an additional EUR 26 billion to manage, so we enjoyed a high level of net inflows, out of which EUR 19 billion were raised during Q4. We have been able to accompany our clients and propose them tailor-made solutions for the specific market conditions characterized by, of course, as you know it well, by high interest rates. So it's actually our expertise in bonds, either active or passive management, in treasury products or in structured products, which have been very successful, sorry, very successful with our clients. Maybe to give one example, significant example of the successful innovative products, we have become the world leader in Target Maturity Funds, a product which requires both investment expertise and proximity with distributing networks, and we collected last year EUR 11 billion with these products.
As a result of this commercial momentum, net flows or total assets under management exceeded EUR 2 trillion, back to the 2021 level at EUR 2,037 billion exactly, at the end of the year. So that represents a growth of 7% over the year. Beyond this, healthy activity, 2023 was also a good year for profitability. Our net income exceeds EUR 1.2 billion, so it is up 4%, thanks to the revenue growth, of course, but also thanks to a good cost control in a context of inflation. You know, this is a part of the DNA of Amundi. This allows us to propose a dividend of EUR 4.10, as high as last year, with an attractive yield of 6.6%.
Now, finally, we have also successfully pursued our strategic plan, Ambitions 25, with new development initiatives in our growth pillars in Asia, technology and services, responsible investment, of course, passive management, and real assets. So let me, let me detail these initiatives, and start with Asia. As, as you can see it, our assets under management reach EUR 400 billion in Asia. I would like to highlight the fact that our joint venture in India, SBI MF, has gathered EUR 12 billion this year. I remind you that this is the number one asset manager in this large and fast-growing country. And I would add that we are starting selling SBI MF capacities outside of India to our international clients as well, so very good partnership.
We have also enjoyed very good business in South Korea, whilst the market in China confirmed its stabilization in second half of the year, so the situation is much better than it was one year ago. Now, technology and services, which is, as you know, an important growth driver for Amundi. We definitely secured in 2023 our leading position as a first-class provider for the whole savings value chain. We gained 10 new clients in 2023. Our revenues increased by 24%. What is really important as a basis now is that we have a very diversified client base in terms of type of clients, asset manager, banks, insurers, pension funds, and also very diversified client base geographically.
As you know, as in all business, this is really important to be able to show a track record, which is now the case. Third, the growth levers, which is important, for Amundi, as you know, responsible investment. We have strengthened very significantly our product offering again, with the launch of 40 funds aligned with the Net Zero trajectory. And the teams have also initiated a dialogue, on climate change with 966 companies exactly this year. A huge effort. You may remember that our objective was to reach 1,000 additional companies engaged by 2025, so we are very ahead, of our plan, on that regard.
We also were ranked in the top three worldwide for voting policy on environment and social issues by ShareAction, which is an important recognition that we're doing, in this regard, a very good job. Passive management. Now, for passive management, it has been a very dynamic year again, fully leveraging on the integration of Lyxor. We posted EUR 17 billion inflows globally, out of which EUR 13 billion in ETFs. So our asset management in ETFs now reaches EUR 207 billion, and we have been going on developing new solutions, new products. There is here an example of the launch of our Euro Govies Green Bonds ETF, which has raised EUR 2 billion in six months. One example, among others, of the dynamism of this business at Amundi.
Last but not least, in the space of real assets, so we are announcing today the acquisition of Alpha Associates. This is a company which is specialized in private assets multi-management. It is based in Switzerland, in Zurich. It does manage close to EUR 9 billion of assets for 100 institutional clients, mostly clients based in Switzerland, Germany and Austria. Of course, this acquisition is completely in line with our strategy to further strengthen our expertise in private assets. It is interesting because it is focused on a fast-growing segment of the market. You know it, of course, the multi-management business enjoys healthy growth for two reasons. The first one is that institutional clients, investors, keep increasing their allocation to multi-management because, in the current context, they want to increase their diversification.
And the second is because this multi-management segment is particularly attractive for institutional retail investor, who are also looking for diversification in this area. This acquisition also reinforces our capacity to invest in the secondary market in private equity, which is gonna be a source of growth as well. Maybe we can go back two seconds to the previous slide. Yeah, just to make sure I give the right figures. So, after this acquisition, our total assets in private assets will be EUR 76 billion exactly. It's not on the slide, but this is the exact figure. Is it? No, it's...
Either of-
It is. Sorry, sorry, my mistake. It is on the slide. So EUR 76 billion exactly, with, as you can see, the total multi-management platform of Amundi, which will represent, adding Alpha Associates to our own capacities, EUR 21 billion, a team of 70 experts, and a much broader product offering, covering private debt, infrastructures, private equity, and venture capital. With a very large range of vehicles in these different asset classes, so an efficient product offering for our clients. And of course, as I was mentioning in the very beginning, strengthen client and geographical coverage, in particular in Switzerland, Germany, and Austria. Amundi teams in the multi-management area were now working with French, Italian and Spanish investors, so very good complementarity in terms of geography as well.
Last but not least, this transaction fully comply with our, usual financial discipline and will be, very value-creating, for shareholders, in addition to be value-creating for our clients. Thanks to the growth potential and the revenue synergies it will generate, we are, very comfortable about the fact that, we, expect a return, on investment of more than 13% after three years, including, of course, revenues synergies.
... I thank you very much for your attention, and I let the floor to Nicolas for more detailed information on our activity and results. I'll come back for the conclusion and, of course, for your questions.
Thank you, Valérie, and good morning to all, to all. I will start, as usual, slide 10, thank you very much, with a quick overview of the market conditions to set the context. We, of course, are all under the impression that 2023 was a good year for equity markets. If you look at the end of 2023 compared to the end of 2022, it is obviously true. However, when we look at the average data, equity markets were only up by 7% in 2023 compared to 2022. But fixed income markets were down by 6%. So overall, the market effect on our net management fees was roughly neutral if you compare 2022 and 2023. So of course, we should keep that in mind when we look at our result.
If we now look at the fourth quarter, movement between the third quarter and the fourth quarter of 2023 were limited on an average basis, despite the increase towards the end of the year. For both equity and bond markets, again, the market effect was neutral or even slightly negative. It's of course more positive when you compare the fourth quarter with the same quarter of last year, thanks to the increase in equity markets. Moving to the following slide, the consequences of this market moves on the evolution of flows for the asset management market, for the whole European asset management industries, as measured here by the flows in open-ended funds.
What you can see is that, in 2023, the level of flows remained low at around EUR 250 billion for the full year, so much lower than what we used to know in 2020 or 2021, for example, and it was mainly driven by a treasury product, close to EUR 200 billion. Medium to long-term products were only EUR 57 billion for the whole year, with a sharp contrast between passive management collecting EUR 225 billion, and active management posting outflows of EUR 168 billion. The data for the last quarter of the year reflects the same trends, low inflows overall, driven by a treasury product with active...
with long, medium- to long-term products, even turning negative on this quarter, -EUR 18 billion, with positive flows in passive management on outflows in active management. So these trends on the whole market are obviously the translation of the high risk aversion across the client base and also the competition, the increased competition from either banking products or government bond issuance. So now if we move now to Amundi, we can see that Amundi performed well in this context. Our asset under management at the end of the year passed the two trillion mark, and at precisely EUR 2,037 billion, showing an increase both over 12 months by 7%, as well as over the quarter by 3%.
In both cases, this is achieved thanks to both net inflows and a positive market effect. Let's go now in more detail on the flows. So starting on page 13, where you can see the breakdown between treasury, medium long-term assets and joint ventures. So overall, for the full year, high level of flows, EUR 26 billion, with a significant increase in the last quarter, significant share in the last quarter, EUR 19 billion. Like for the European market, as we've seen, flows that were driven by treasury product, but also a very good level of performance from our joint ventures.
Despite the risk aversion across our clients, we nevertheless succeeded in posting a flat performance over in medium to long-term assets, and even net inflows of close to EUR 2 billion in the last quarter. This was achieved, as Valérie mentioned, in our introductions, thanks to strong inflows in key areas of Amundi's expertise that correspond well to the market context. In particular, four areas of expertise. First, active bonds, where we collected EUR 18 billion last year with an additional EUR 1 billion coming from private debt. So EUR 18 billion, excluding the outflows from the insurance mandate.
This was, in particular, driven by the great success of our Target Maturity Funds, which gathered EUR 11 billion, and, it must be noticed that Amundi was the world leader for this bond strategy last year. This strategy that fits perfectly well with the market context in which we operated. Also, a strong contribution from passive management, seventeen billion euros overall, including, in particular, thirteen billion in ETF, among which a significant share came from the fixed income as well as ESG, ETF. I will not come back on Treasury products, nineteen billion euros, which become, again, an investable, an attractive asset class for all the, all the, client segments, including retail, thanks to the, the return to, to positive, to positive return in, in short-term products.
Finally, another key area of expertise for Amundi, structured product, where we enjoyed net inflows of EUR 6 billion, mainly in our partner networks. So thanks to this expertise, to these blockbusters, we were able to offset the outflows from higher-risk products, and in particular, multi-asset, which suffers withdrawal, like for the rest of the industry. These flows, of course, are also the result of the good performance overall of our investment management teams, are reflected in the data you can see on the screen.
To take a broader view on an open-ended fund, we can see that more than 2/3 of our funds, whether you look at the one year, three year, or five years, are in the first and second quartile, according to Morningstar data, and in particular, a good share of them in the first quartile. And we do have 270 funds with a rating, which is at 4 out of 5 stars. And if you look at a broader view, not only including open-ended fund, you can see that more than 80% of our assets outperforms their respective benchmark over five years. So obviously, a good performance, which support our commercial momentum.
Turning now to the activity by our client segments. Starting with the retail segment, we can see that we posted a resistant performance despite, again, this high-risk aversion. Overall, we achieved EUR 7 billion of inflows over the year, with a particularly strong contribution from French networks, thanks to this product I was mentioning, our treasury fund. Also, a good performance in third-party distribution, thanks to a passive management on again, a treasury product. As far as the international networks are concerned, if you exclude Amundi BOC, they were flat. It's mainly due to the strong competition over the year and again, in the last quarter of the issuance of so-called BTP Valore in Italy. To give an illustration, in October, the Italian government raised on the Italian market investors.
So despite that, we are resisting well, and our partner networks in Italy were, in particular, very successful in selling Target Maturity Funds, which offset the outflows that we saw, for example, in multi-asset solutions. And the trends was quite similar over the last quarter. Regarding Amundi BOC Wealth Management in China, we report over the last quarter slightly negative outflows due to, like in previous market, coming of maturity to product launched at the creation of Amundi. But we can see that overall, compared to the trends one year ago, we are seeing a stabilization of the situation.
Moving to the institutional segment, following page, we posted strong net inflows of EUR 12 billion for the full year, and this despite the continued outflows coming from Crédit Agricole and Société Générale Insurance Company, outflows that are generated by the outflows you are seeing in the French market on the euro contract that feed the mandate that this insurance company are allocated to Amundi. But all other sub-segments contributed positively, in particular institutional and sovereign funds close to EUR 13 billion, corporate clients or in France employee savings schemes that posted close to EUR 2 billion of inflows.
This was driven by a strong performance in Treasury products, in particular, for example, with corporate client, but also by long-term assets, with inflows concentrated in passive management, in active bond strategy, but also, private debt. Again, on the group insurance, the outflows close to EUR 10 billion for the year are related to the redemptions in the euro contract. We are returning slightly positive in the fourth quarter due to the allocation of a new mandate in active bonds to Amundi.
To complete this view on the activity, the joint venture or minority joint ventures, we can see that we again posted a strong performance, EUR 7 billion over the year, with again Valérie mentioned it, a very strong contribution from SBI FM, our joint venture in India, EUR 12 billion euros during the year, with quarter after quarter strong inflows coming both from retail or institutional, Indian institutional clients, but also very good contribution from our JV in South Korea with NH, which posted EUR 4 billion euros. Concerning our minority JV in China, the one with ABC, which posted for the year outflows around EUR 8 billion euros, but you can remember they were concentrated on the beginning of the year and due to some larger institutional outflows.
Over the recent period, we are going back to a positive territory, I would say, with if you exclude the low margin runoff activities of the channel business, positive inflows in mutual funds in Q3 and Q4. Moving now to the results, starting with the fourth quarter and the revenues. Our revenues were EUR 806 million in the first quarter, up by 3%, a bit more, a bit more than 3% compared to the previous quarter.
This was driven by a high net financial income, thanks to higher rates, a higher level of performance fees in that quarter that benefit from a larger number of funds anniversary date, and a good growth in the technology revenues, which reached EUR 18 million during this quarter, up by 28% compared to the previous quarters. Net management fees resisted in the context of risk aversion that I mentioned, so despite the impact of the unfavorable product mix on fee margins. Moving to the cost. Costs remain under very strict control during this quarter, reaching EUR 426 million.
As you can see, remarkably, flattish, flat compared to previous quarters, despite the inflationary environment, and despite also the investment we continue to make in growth initiatives, which are offset by further efficiency gains and the completion of Lyxor synergies. As a result, our adjusted cost-income ratio for the fourth quarter improved slightly compared to the previous quarters and was at 52.8% during the fourth quarter. This leads us to the evolution of our adjusted net income. As you can see, it's up by close to 8% compared to the previous quarter, reaching EUR 313 million.
This growth, despite the difficult environment, was supported by the increase in the operating income, but also by the contribution of our joint ventures, which is up by 20% compared to the first quarter of 2023. Turning now to the full year. Similar strengths overall, starting with revenues that were up by 2%, a bit more than 2% compared to 2022, thanks to the turnaround of net financial income, which was positive in 2023 versus negative in 2022, in a context, 2022, where for most of the year, short-term interest rates were still negative. Technology revenues, Valérie mentioned, it, are up by 24% compared to reaching EUR 60 million euros.
Performance fees are slightly down year-on-year due to a more volatile environment over the year, and the progressive impact of the ESMA guidelines requiring longer-term calculation period for these fees. EUR 123 million, a good level in this context. Finally, our net management fees are down very slightly, but resisted well in a context where our average asset under management also declined very slightly. As we can see on the following page, thanks to fee margin, which was almost stable, thanks to Amundi business model and diversified profile, it resisted well, as it did over the past.
The small decrease that you can see in 2023 is obviously related to higher risk aversion, which has resulted in a shift on inflows toward treasury products, passive management, fixed income products that tend to have lower margin compared to higher risk product with higher risk and higher fees product. But overall, this decrease remain very modest, explaining the good resistance of our management fees. Moving to cost, basically, to reiterate the comment I made on the fourth quarter, they remain under control, EUR 1.7 billion for the full year, up only by 2%, so much lower than the inflation we have been facing in the various countries we've been operating, in particular, of course, Europe.
This was achieved thanks to the full realization of Lyxor synergies, which were achieved in the first half of the year, represent EUR 60 million on a full year basis, as announced, and has been recorded, I would say, in advance compared to the initial plan. But also, so thanks to the, this synergies, but also our ongoing cost efficiency efforts that help us to finance the investment we are making in our development initiatives, in particular, technology. As a consequence, our adjusted cost-income ratio was 53.2%, basically stable compared to 2022, and again, the best level in the industry. To finish, an increase in revenues by around 2%, an increase in cost by around 2%.
So very logically, our operating result also increased by a bit more than 2%. It was complemented by the strong contribution from our joint venture, our equity-accounted agent joint ventures, which represent overall EUR 102 million. And in particular, the very strong contribution from our Indian JV, which I mentioned, and which contribution to our net result is now close to EUR 80 million. As a consequence, our adjusted net income reached more than EUR 1.2 billion, EUR 1,224 million, to be precise, an increase of 4% compared to 2022.
It should also be noted that, at the constant market condition versus average of 2021, our adjusted net income grew by 7% per year on average, compared to the normalized level of 2021. It is to be compared with our gross target that was set when we announced our strategic plan from 2025, which was an average of 5% of growth over the 2021-2025 period. So you can see that Amundi's high profitability has translated into a good financial performance despite the higher risk aversion coming from the volatile market. Let me finish by a word about our financial situation, which obviously remained very robust.
At the end of 2023, our tangible net equity before the distribution of the dividend, we are proposing at EUR 4.1 per share, to be paid in June. So this tangible equity was EUR 4.3 billion, up by EUR 0.4 billion compared to the end of 2022. This reflects the continued net income for the year, EUR 1.2 billion, and conversely, the dividend paid on our 2022 result, EUR 0.8 billion in last May. I now leave the floor to Valérie for some words of conclusion before we can take your questions.
Yeah, very quick conclusion to tell you that, I think that we showed that our diversified profile, our agility to answer to our client needs according to the macroeconomic context. The long-term growth drivers that we are in, passive management, real assets, Asia, technology, and our globally high level of profitability allow me to be absolutely certain that we will continue to create value both for our clients but for shareholders as well, in the next months and years. Thank you for your attention, and we are, of course, at your disposal for any question.
Wow, okay. So we will first take the question-
Original question.
From the room. Then we'll take them from the phone, and we'll also have a look at the questions from the webcast. And I will just ask them as they, as they go. Nick?
Yes. Good morning. It's Nicholas Simon from Citigroup. Thank you. Thank you for the presentation. Two, two questions from me, please. One on the SBI JV and one on the Alpha Associates acquisition.
Yeah.
So on the SBI JV, another impressive quarter of growth, a really strong year. I guess, what is the latest on the plans to IPO part of that business, and what do you need to see from a market perspective in order to proceed? On the acquisition, I'd like to dig a little bit more into the rationale, please. I mean, I hear you that multi-manager is a growth area. Private markets is clearly a growth area, but why does this make more sense to you, rather than doubling down on direct? And then maybe moving into...
Maybe just one second to make sure that everybody can hear your question.
There's an-
There is a microphone.
There is a mic.
Can you hear me now?
Yeah.
Yes.
Perfect. So I was just saying, I was saying, why, why does it make more sense to do this rather than doubling down on direct and then maybe even moving into semi-liquids? And that's, I guess, that's, that's certainly a route that other managers seem to be going down. And I guess just a follow on from that on growth, I mean, I see the 15% average growth rate over the past five years, although equally, the last couple of years have been a bit, a fair bit slower and certainly slower than the industry. So could you give us a sense, please, of the business plan expectations for growth? And then within that, the retail, are we talking about more retail, retail within the retail networks, or is it more high net worth and third-party distributors? Thank you.
Hello. Very, very good question. So on, on SBI, no, no, you know that we, we had decided with our, partner, SBI, to, postpone the potential IPO. There are no news on that front. We'll see, no emergency, certainly no emergency either. So for the time being, no specific news. Sorry, on, on, on SBI, you had another question about the market,[inaudible]
[inaudible]Just saying what you, what you're looking for in order to proceed with that,
In order to proceed the IPO, you mean?
Yeah.
Well, of course, as you know, we are a minority shareholder on SBI, so it's also a question of what is the agenda of SBI, which is a huge group, as you know. And once again, I'm gonna tell you on our side, the way it is today is perfect. So we're not pushing for it, but it might come back at some point. But no reason to see it in the very short term. On Alpha, I will let Nicolas be more precise on the business plan. But the rationale on the multi-management is really, as I said it, well, first of all, you need, in this kind of operation, you need to find a good company, the good fit, the good financial, also, discipline.
I think that you can see that in this area, we are delivering all the time. But specifically on the multi-management, we really feel that in the next few years, it will be an area which will grow faster than some other direct assets. Because of the search of our clients for diversification, it is a capacity as such to be able to select properly asset managers. They have very strong expertise, a very long track record. It also allows us to enlarge very significantly the offer in private assets. Sorry, in private equity, in private debt, in infrastructure. So for all these reasons, we have a strong conviction that the growth we expect will be delivered, no doubt.
This is for institutional clients. And for your question about retail clients, as of today, private assets are really very much reserved to very high net worth clients for obvious reasons. As you may know, in Europe, there is a new LT format, which will be much more practical, efficient, and easy to use, I would say, for more affluent clients, but not very wealthy ones. And once again, with these type of clients, diversification is absolutely key. It's key for them to diversify the risk. It's key also to be able to introduce different brands, different teams, different track records. So multi-management is honestly the best way to enter these areas for this category of clients, for both...
As you know, we can have access to a lot of retail clients through all the 600 distributors we're working with in the world, so we are once again pretty sure we can deliver on the targets.
And the question on the-
We... On the-
growth plan.
To be precise, mm-hmm.
I would say we have, on a standalone basis, we would probably be a bit, a bit more cautious, in term of, at least in the short term, in term of projection of growth compared to, what has happened in the past. But the good thing is, Alpha will not be operating on a standalone basis, will be integrated in Amundi Group, will benefit from the distribution capabilities of Amundi Group, all across the world, for institutional client, and the, the design of retail solutions, that we can, propose to our, to our client base in, in, in retail and distribution. And as a consequence, our business plan, taking into account these synergies, account for, in fact, an acceleration of growth of this, of the activities, coming from Alpha.
Tom?
Thanks very much for taking my questions. I have two, please. Firstly, I think in Q4, we'd seen Invesco return to net inflows in that Great Wall China JV. And they were talking a little bit more constructively around the outlook there. Could you maybe provide some thoughts on how you're seeing things develop this year for both of your China JVs as well? And then secondly, I think there's quite a broad expectation that a number of banks are going to add inorganically to their fee income as interest income peaks and starts to decline. Do you see more scaled competitors presenting a more competitive threat? And perhaps more specifically, you know, I think there's some speculation out there around what Natixis Investment Managers may do over the course of the next six months.
Could you rule something out there, any kind of transaction with them?
Hello. On the JV side, your question was really about the growth perspective of our JV globally. Is that right, the first question?
The China JV, specifically.
The Chinese JV. Okay. So we-
Because I-
... Both Nicolas and myself missed your first. Okay. Well, for China, on the next few months, what we expect is to go on seeing the stabilization and hoping that we will see a growth starting again, but probably slowly, yeah? We do not expect a booming market in 2024. We really focus very much today... And once again, I'm gonna tell you something I already said, but China, for us, is really a long-term story. I mean, we know for sure that this market is gonna go continue growing. And this is obvious because of the growth of the country, the wealth of the country, which requires more saving solutions.
There is a very important factor with China, which is that the population is aging fast as well. So it's not the case for the time being, but we know that at some point there will be strong retirement solutions needs, which will accelerate the growth of this market. So we're in China with very strong two partners: ABC on one side, BOC on the other side. We're on the FMC Fund Management and on the wealth, asset management, so we have strong positions. We are happy to see that the market has stabilized, but we're here for the long run, and we will see the growth. On the short term, we do believe that obviously India and South Korea will be more dynamic for next year.
On the consolidation topic globally, and of course, I will not comment any competitors. What I will remind you, and I think you know that well, is that we are a natural consolidator. We are, of course, we have the capital that Nicolas was showing again. So, we told you that by 2025, we will try to go on reinforcing our organic growth through acquisitions. Of course, in life, you always need to have a seller and a buyer at the same time, a good fit, and good financial conditions. But if this is happening, you can be sure that we will be here.
Hubert?
Good morning. It's Hubert Lam from Bank of America. I've got three questions. Firstly, on Alpha again, just a couple of things on it. Firstly, on the revenue synergies, can you talk about your confidence around the revenue synergies? Because if you look at the revenues in Alpha today, it's EUR 50 million, but the revenue synergies are EUR 20 million, right? So it's about 40% of your revenues you expect to be higher from revenue synergies. So it's quite important to how we think about your confidence around the revenue synergies and where they come from. That's the first question. And related... Sorry, related, another question regarding Alpha is about the earn-outs.
Can you talk about what are the milestones or what is needed to pay the extra, what is it, EUR 190, is it, additional to the vendor? Or like, what needs to be, what you need to achieve to get to pay the extra amount? Second question is, again, on the consolidation. Can you remind us how much excess capital you have? And also, you know, after this deal, are you still looking to do more deals within the private space, or is this it for now? And... Sorry, one last question on fee margin.
I think one of the charts you show that 17.7 basis points for the fee margin for the year, but I think if we calculate the Q4, it's actually lower at, like, 17.12 basis points. Like, should that be the starting point, when we think about fee margin for 2024? It's obviously a lot lower than what you had for the year. Thank you.
On the-- I'm gonna let Nicolas be more precise on the figures, but on the confidence we have about the revenue synergies we are announcing today, it is high. It is high because the team and the company has have the good track record, and but they do not always have access to the right clients because it remains a small team, very localized in part of Europe. And we have a much, much stronger client base that we can introduce them to. So, if we add the track of the team, the experience of the team, and the distribution capacity of Amundi, it makes us very confident about delivering the revenue synergies that we are announcing. On the earn-outs, Nicolas, you want to give some more details again?
The earn-out, so, as we have explained, less than half of the total possible price, EUR 160 million, will be paid immediately. All the rest will be deferred progressively over the next five years and will be conditioned to the increase in revenue. So in line with the business plan. So it's a way to have a structure which is very secured. You have in mind that the net result... It was the previous page. The net result we expect for this year is EUR 18 million. So what we paid immediately is EUR 160 million. So it's already a return on the first year of around or a bit more than 10%.
Over the next years, we expect the revenues and hence the result to increase significantly, both, I would say, on a standalone organized basis, but also with the synergies we developed. So the revenues, the results will increase significantly. Progressively, over the next five years, we will pay more, but that's why we are comfortable in saying that, within three years and even more in five years, the return on investment will be above 13%.
The idea maybe on the structure of the deal was, first, to make sure that our shareholders feel that this was really a very added value deal in terms of financials, and second, to align very clearly the management team and ourselves on the strong development of the company. So, the way we organized it was really to make sure that we feel super comfortable about the growth, and we do. We do, really. On the second question, which is the excess capital, so it's around EUR 1 billion, Nicolas?
Pro forma of the acquisition of-
Pro forma of the acquisition, of course.
... Alpha.
Answering your question about what we're looking at, it's really there is no limit to what we are looking at, as long as, so it could. So to answer very precisely, it could be Private Assets again. There is no limit as long as one, it does accelerate organic growth in areas which are strategic for us. Second, as long as financially it complies with our usual discipline. And third, as long as we feel that the execution of the deal will be efficient and doable, because that's always not only the deal, but what you do with the deal towards which counts for you, for us. And this is a very important point, and typically with Alpha, we have a strong cultural DNA.
We know that the teams will fit well within Amundi world, and that, they will fit well with our client base, and that's why we are, very confident. So it can be a question of distribution in a new area, or, or to reinforce our distribution capacities in new areas, like what we did with Sabadell in Spain a few years ago. It can be, reinforce or, some expertise. It's what we're doing with Alpha today. It could be in technology, if ever there was something interesting. So no, no limit to what we're looking at, as long as it complies with the various, conditions I was mentioning. On the fee margin, Nicolas, you want to answer?
Fee margin, I answer you... I think you know it already. We shouldn't concentrate too much on quarterly data. We look at it, because from one quarter to another quarters, you can have some categories of fees that are not purely linear. What is important to see, the, I would say, the longer trend, if we... I don't know if you can come back to the slide, and you can see that on a 3-4 years period, the margin has been quite stable, remarkably stable. There's a slight decrease this year. It's due to the what we said, and the product mix, more demand going to lower risk, lower lower fee margins.
If we think going forward, probably in the very short term, this trend, due to the market trends and the demand, should continue. But when risk appetite will come back, we have a very larger set of expertise, and when risk aversion decrease, we will be ready to promote and sell more products with a higher risk profile and probably with higher margins.
Our strategy, if I can just add, our strategy is very clear. What we want is to make sure that our clients feel that at Amundi, they get what they need at the time they need it. So, we are not pushing things which are not adequate for them. Obviously, last quarter, this quarter, probably again, we will go on with the same trend, but it's also a way to make sure that they trust us, and to make sure that they feel they can find everything at Amundi, so we are not pushing this topic of margin. We want to make sure our clients feel very confident with what we offer them.
Bruce over there, and then Alma.
Thanks. Yeah, Bruce Hamilton, Morgan Stanley. Just a couple of questions from me. Firstly, on kind of the evolution of client demand as you see it in 2024, obviously, we've been in a period where treasury products have been in high demand, given the rates environment. From your discussion with your various distribution channels, do you see that changing, and how do you see the path in 2024? And then secondly, just some more clarification on the acquisition. So if I'm understanding it correctly, the near-term opportunity is really to distribute into a broader set of European institutional clients, and I assume typically it's going to be smaller institutions, 'cause larger ones will go direct. And then in terms of the retail piece, we agree on a five-year opportunity that looks quite significant, but it...
Are you already set up with ELTIF products, or is there some product innovation that?
Well-
... has to happen, and so there's quite a big time lag? So how, how do we think on that? Thank you.
Well, on the distribution, the situation we have today is rather linked to the level of the rates, actually, so of course, when you see the level of the rates, we have clients who feel very comfortable with Treasury products, or the active fixed income maturity products, which are super efficient, as a promise to the final retail clients, and which is also a way for us to fight, and I'm sure you saw that with what we've done with the French retail networks. It's also a way for us to fight and to compete with the on-balance sheet saving solutions that the banks, of course, are pushing. This is true in France.
This is very true, in Italy, as well, or the competition, as Nicolas was mentioning, of sometimes the govies, as such. So it's quite, I would say, it's quite obvious right now, in January 2024, this trend will is gonna last, and then it will depend a lot about how, what's happening with the rates and the capacity to re-embark more risky solutions during the year. This is what we see as of today. The second point was about... Sorry, I didn't write. I should have. I didn't write the question.
Alpha, the second question was,
So sorry, Bruce.
Clients, smaller size.
Smaller size of clients?
Expanding the client base.
So yeah, I guess I was trying to just understand. So it sounds like the near-term growth is from extending the client pool from that fairly Swiss base to more Pan-European.
Yeah.
That institutional client base, I'm assuming, would be at the smaller end, because larger clients will go direct. Then on the retail piece-
On the retail side, the ELTIF topic.
Do we have-
I remember that. Thank you. Sorry, Bruce. On the institutional clients... You are absolutely right. It's more second-tier than first-tier, but you sometimes see our first-tier clients investing through multi-management as well. I mean, we have actually the clients we already had at Amundi investing into our multi-management solutions are first-tier clients. So it's not as simple as that, huh? It can be first-tier client as well, but very efficient for second-tier one. And as you know, Amundi address all of them, so we will not put any limit, of course, to the introductions. Speaking about retail clients, we do already have ELTIF format... the, I would say, the capacity to deliver the format is already organized in Luxembourg.
So we do have everything in place to push quickly the solutions to retail clients, to answer your questions.
And maybe to complement on the retail, retail side, it's obviously designing products such as LT that are purely, private market, but for example, with diversification, a bit of private debt, private equity, and so on. But it's it can also be through introducing in a long-term, multi-asset product designed for a more mass affluent client, introducing or increasing the share which is allocated to private market within this kind of product, especially, for example, in the framework of retirement program. And that's a way to expose in a moderate and reasonable way this type of clientele to this expertise. So-
You may know that in a UCITS fund, you can include up to 10% of this kind of solution, regulatory. Also, it can be sold as such, as Nicolas was saying, through LT format, for instance, or included, packaged in, I would say, usual liquid active funds as a share of the fund.
Thank you.
Arnaud? Just here. All right. Thank you.
Good morning. Arnaud Giblat from BNP Paribas. Exane, I've got three questions for you, please. So if I focus on your highest margin business, which is retail ex-JV, ex-money markets, ex-BOC, you had EUR 2.7 billion of outflows in Q4, with good traction in ETFs and good traction in structured products. So I'm wondering if you could talk about where there is a weakness. Where are you seeing the outflows? And if I zoom in on that, I'm wondering if real estate is part of the area of weakness. I mean, there's been significant writedowns, not just from Amundi, but across the industry in the SC, SCPIs. Is this a risk, or has it been an issue this quarter, and is it a risk in the future?
And my second question, or rather my third question, is on the acquisition again, on Alpha Associates. Could you name which distribution partners we should be looking at, where you... on the retail side, where you'd expect to see some strong traction? I'd assume it's maybe Société Générale Wealth or Indosuez, but is there any specific distribution partners where we should be focusing on?
Which topic, Arnaud?
On Alpha.
On Alpha? Hello. Outflows, where we saw it, is mostly, as Nicolas mentioned it, multi-asset solutions, in the context of, once again, the risk environment. And real estate, you're right, but actually less than we were expected. As you could see, it's two billion outflows, which is considering the market, we could have expected more, and it is limited to EUR 2 billion. It's EUR 2.1 billion exactly, if I remember well. So it's... There is some outflows, but at a very slow pace, from what we see. So that's for your question one and question two. And it's true for SCPI or for other real estate formats, there is no specificities.
You know, in France, there is OPCI as well, but it's the same. There is no strong acceleration recently at all. On the distribution, there is absolutely no limit to it. It's not specific to Société Générale or to Amundi's. We feel also very comfortable to introduce the solutions to any third-party distributors. It's not only. There is no reason we would promote these solutions to our retail partners only. I remind it just to make sure that you all have it in mind. Today, the third-party distribution business of Amundi, it's roughly 45% of historic partners, so Crédit Agricole, Société Générale, UniCredit, et cetera, and 55% external third-party distributors.
There is no reason to reserve it to one or to the others. Obviously, we will introduce them to all. That's for the, I would say, the direct promotion, and when if some of our portfolio manager on the multi-asset side consider it's useful for their own performance to include Alpha Associates' strategy in their own portfolio, they will do it whoever they work for.
... Okay, over there.
Thank you. It's Mike Werner from UBS. Two questions, please. First, on Alpha, can you just confirm how you expect to integrate that business? I know you have an existing multi-manager operation. Is there cost synergies? Do you plan to keep it at arm's length? You know, just trying to think about how that business gets integrated within Amundi. And then the second question, perhaps for Nicolas, I guess on finance income, we saw a pickup obviously in recent quarters. Can you just give us an idea of kind of the yield you're generating on the cash balances that you have and, you know, how you expect that to progress as we look forward? Thank you.
On the integration, we really want to let this company... There is no cost synergies. I mean, it's not a big deal of cost synergies that we, like we can make on the active management, on this area. It's I think we didn't even to take into account any cost synergies. Obviously, there will be some. We will probably at some point share the same tool, but it's not significant. I mean, this is really a growth synergies, and this team is working very well, functioning very well. We want to let it live as it is. There will be a common management, of course.
They will be in the business line of what we call ARA, Amundi Real Assets, alternative and real assets, but they will stay the way they are. So we will really focus on the revenues synergies. Nicolas, on the second point?
On the financial income, it's obviously very much linked to the level of interest rates and in particular, short- to medium-term interest. So today, around, let's say, around 4%, and it probably staying so in the months to come, and as I would say, everybody, we expect to have a decrease somewhere, probably in the middle of the year.
Okay, Angeliki, over.
Good morning, and thank you for taking my questions. It's Angeliki Bairaktari from JP Morgan. First one on flows in international networks. There is another BTP Valore placing in February in Italy. Shall we expect still weak flows from the Italian networks in the first quarter, given that context? Then, second question on your Korean joint venture, which, as you pointed out, has produced very good net flows this year. What type of products are sold there? Are they predominantly in the retail space? And also, if you can give us, if you can tell us what is the average margin on those products. And third question, I think in the press release, you mentioned that you reached EUR 400 billion of assets under administration in Fund Channel.
Is this platform now only administering Amundi's assets or also third-party manager assets? And how do you envisage growth in that business going forward? What is the next step for that platform? Thank you.
All very good questions. Italy, it's not a question of partners or not partners. The Italian market, considering the new BTP offer, will be, as it was last year, a difficult one for everyone, no more, no less, and it's not specific. You know that in Italy, half of our assets are with third-party distributors as well, so it's not only about partners, so it will be for the market overall. No reason to see anything else. On Korea, it's quite a diversified mix of business. There were significant flows in institutional business, but also in retail. So it's a complete, I would say, set of business. It's not only the one or the other to us.
On the margin level, Nicolas, you have that in mind or not?
Margin level is, I think it's... No, it's more than Amundi because there's no big mandates of such as we have. So I think it's probably around 30 basis points. I will check.
We will confirm to give you-
In terms of expertise, it's quite diversified. It's mainly local assets, but fixed income, multi-asset equities, and also they are launching, and they have an ETF range of products. The share of international assets is also increasing as the economy is getting more open to investment in overseas assets.
On Fund Channel, we didn't. You're right, we did not come back to it. I don't remember if we said it last quarter. So we have new clients. We won especially a very large one with ABN. So the way the platform can progress is twofold, actually. The first one is by winning RFPs, like the one we won with ABN, for instance, where and of course, it's a longer-term process than the one of asset management. But when you are in, you are in for a much longer time as well, huh? So winning a big client is always a strong step, a long process, but a strong step forward.
And the second way is convincing very large banks to switch and to buy, I mean, to give their this activity to Fund Channel by taking a little share of the company. It happened already with some of the competitors. So we are following right now, both ways. And one of the big step of this year with Fund Channel was to finalize completely the level of the offer, to make it super competitive compared to the other ones, and this required the link between CACEIS and Fund Channel for the execution, and this has been completely done. So once again, we confirm the ambition on Fund Channel.
I think we need to get a question about the share of Amundi assets in the assets under distribution. Obviously, a multi-manager platform.
Majority of non-group
Non-group assets.
Yeah. And the development is on non-group assets.
Mandeep?
Good morning, everyone. Mandeep Jagpal, RBC Capital Markets. Thank you for taking my questions. Two from me, please. First one on institutional. Some good wins in the last two, last two quarters. Are you able to provide any insight on the institutional mandate pipeline and which asset classes these might be in? And then one more on Alpha Associates. As you mentioned, it's a relatively small team with a strong track record. Are there any structures in place to ensure that key people are retained following the transaction?
Yes, we do. We did not forget that. It's important. So for the second question, the answer is yes, of course. And for the first one, honestly, on the institutional side, the variety of clients and their geography is so big that I'm not sure I could give you a strong trend. If I put aside corporates, of course, corporates, it's about treasury. But if I look at pension funds or strong sovereign funds, I mean, very large sovereign funds, it can be very diversified according to where they are and what their investment strategy and capacity.
If I had to give you some hints, I would also tell you that globally, we see a rather risk aversion and some cautiousness and more RFPs on the bond side and on the equity one. But it's a bit difficult to give you one trend only because these are really very different clients according to the one you're speaking to.
Okay, there's one last question over there.
Thank you. This is Sharat from Deutsche Bank. I have two more questions. So first one is on Amundi Technology. It was encouraging to see another growth pickup, and you previously spoke about the current environment, partly responsible for slightly sluggish growth versus your 2025 ambitions. But just wanted to... If I extrapolate, you know, the current growth over the next two years, I still see you would fall short of about EUR 40-50 million. So just wanted to take where you are with your 2025 targets of EUR 150 million. And second one is on performance fees. I know you were a bit cautious, the pre-earnings call, but even with the strong rally, I was surprised to see it half. Was this, like, for Q2 2022 levels, or was it almost ESMA guidelines which are responsible?
So, would EUR 120 million be the kind of going run rate, or wanted to have your thoughts. Thank you.
On the run rate, I will let Nicolas answer to make sure we deliver the right figures on performance fees. On Amundi Technology, at the level of the development we are, extrapolating this way is very complicated because it's still a one-by-one case basis, client basis. So, it can be suddenly, we can have suddenly a very big client, or we can have several smaller ones. I honestly would not be able to extrapolate. The only thing I can tell you is that we are convincing every day, more and more clients. We have several offers which are competitive, and we are gathering more track records in various countries and various environment. Typically, to give a few example, I think we gave them in one of the slide.
We were working this year with a Dutch pension fund who installed Alto PMS. We just installed Alto Wealth and Distribution in Spain recently. We just won a Swiss private bank. So all these additions of new clients in new geography with our new offers is making us stronger and stronger, and we generate new business. But it's not as linear as some other activities could be, so I honestly would not be able to extrapolate. What I'm seeing is that the growth is here. We can convince our clients, and we're very happy to go on investing in this area.
Regarding performance fees, I don't think there's really something such as a run rate for performance fees. It's really by definition a relatively volatile line of the PNL because it depends on relative performance of a very strong variety of funds. But the good thing at Amundi is we have a very strong variety of expertise across the board, so there's always some that are performing and some less performing.
If I try to give some direction, just going to the past, what we have seen in the past, that in average, on a yearly basis, we managed to have in average around EUR 101 million, EUR 160 million and EUR 170 million in average, but with significant variation from one year to another, from less than EUR 100 million to, 2021 was more than EUR 400 million, was really exceptional. What we can say is that, the impact of the new ESMA guidelines should as progressively as they got, completely implemented, an impact of around -30% in our, I would say, capacities to generate performance fees.
So, with these two numbers, I think on a very long-term direction, directionally, can give you what, what we can in average generate, but again, from one year to another year, to another, it really depend on the market conditions and, of course, the relative performance of, all our, all our teams.
Okay. I don't think there's any question from the conference call. No further question in the room? No question from the webcast. Okay, I think we've folded it. Thank you very much again. If you have any follow-up question, obviously we are here available.
Oh, yeah, a question.
Apparently, there's one. Sorry.
Yes? No.
No.
No.
From the conference call. The first question from the conference call is from Carlo Tommaselli with Société Générale. Please go ahead.
Yes, good morning. Thanks for the presentation. I have two questions, please. The first one is on Alpha. Generally, do you have the capacity to integrate more than one deal at a time, or Alpha is small enough not to matter? Number two is about Italy. Again, flows were weak in the fourth quarter. Again, we had deposits and sovereign competition impact, but the distribution agreement with UniCredit is clearly a key topic. So my question is, are you already in talks with the bank's management for any renegotiation of the agreement, or is it too early to do that? And are you considering to raise the rebates to the bank network in this respect?
Thank you for these very transparent questions. On the capacity to integrate two transactions, I'm gonna answer: It depends a lot about the transactions. Speaking about the one we are making now, it is very specific. As we were mentioning, there are no cost synergies. To answer very clearly to your question, if we had a new deal coming in the next few months, it would not be a problem at all. I could answer... I would have answered something else, for instance, when we were doing Lyxor, because this was a huge deal of cost synergies, where the whole machine has to work on it.
Here, it's completely separate and focused on revenue, so no, no limit to do something else in the near future. On, on, on the Italian market, and once again, it's not only about UniCredit, and you were mentioning the flows were low in the last quarter. But I would like to have figures to give you, but I'm pretty sure they were, in relative terms, better than for competitors.
For the full year on open funds, the outflows were more than EUR 20 billion for the whole market.
Right.
So, I don't remember for the last quarter, but.
I'm absolutely certain that we've done better in relative terms, and I'm very confident, and we will do better in relative terms. But not avoiding the fact that the Italian market will be a difficult one, whoever it concerns, in the next few months. And of course, on UniCredit, I reassess the fact that our contract is ending mid-2027.
Okay. Very clear and transparent.
I think there's another question on the call.
The next question from the conference call is from Pierre Chedeville with CIC. Please go ahead.
... Yes, good morning. I hope my question hasn't been asked because I have been cut briefly. My first question is regarding India. Last week, one of your competitor said that it was seriously considering entering the India market by external growth. And I was wondering if, apart from your partnership with SBI, you could consider external growth in India, or if you were bound by your agreement with SBI, and what do you think about external growth and more competition in India? And my second question relates to your real asset part.
A significant part of real assets is real estate, and I just, I was just wondering, in the current context of difficult times, with real asset, if you could give us a little bit color regarding the valuation of these assets and the idea for your clients. Thank you very much.
We answered actually already on the real asset side, and my answer was to say that, of course, considering the market, there are outflows on the real estate, but which are actually rather limited compared to what we could have imagined. So, that's my point and answer on the real estate, not real asset, real estate.
I was not really talking about outflows, but the mark to market of these assets.
Ah! The valuation are being done, so I have no answer right now on that topic. We have no... It's too early, actually, to give you an answer on that point. Sorry for that, but it's not finalized.
Okay.
On India, there is no limit to my knowledge, but honestly, I mean, there is absolutely no interest for us at all to do anything else than to work incredibly well with SBI. I remind you, SBI is the first bank of India, 25% of market share of the banking industry in India. We have come in 15, let's say, in 10 years, from 0% market share on the asset management industry to 18% market share. We know that we will go on growing very fast, so I can understand that some people want to invest in India, but on our side, we have the best partner ever.
Thank you.
Okay. This time, this is it. Okay, it seems that we are finished. Thank you very much again for your participation and for your attendance, for those of you who are here. We are obviously available with Thomas for any follow-up questions that you might have. And in the meantime, have a very good day and a very good rest of the earnings season. I know that we have been kept busy, so talk to you very soon. Bye-bye.
Thank you. Thank you very much. Thanks.
Thank you.