Azimut Holding SpA

MIL:AZM

Earnings Call Analysis

Azimut Holding Reports Solid Q1 2024 Results and Strong Cash Position

Azimut Holding delivered robust Q1 2024 results, with net inflows reaching EUR 2 billion by April and total quarterly revenues of EUR 351 million. EBIT rose by 8% to EUR 161 million, and the company achieved a net profit of EUR 122 million despite IFRS 17 adjustments. The CEO reaffirmed the targets of EUR 500 million net profit and over EUR 7 billion net inflows for the year, supported by a strong cash position exceeding EUR 1 billion, of which 60% is freely available. Significant developments include the successful execution of private market transactions and plans for the New Bank spin-off, anticipated within 6 to 9 months.

Strong Start in Q1 2024

Azimut Holding reported a robust financial performance in the first quarter of 2024, with net inflows reaching EUR 1.5 billion, which increased to EUR 2 billion by April. The total revenues were EUR 351 million, alongside an EBIT of EUR 161 million, reflecting a consistent EBIT margin of 46%. Adjusted net profit stood at EUR 122 million, after considering adjustments related to IFRS 17.

Reaffirming Growth Targets

The company reiterated its target of EUR 500 million in net profit for the year and projected over EUR 7 billion in net inflows, bolstered by strategic partnerships. This confidence was underscored by current quarterly results and ongoing discussions for value-extracting transactions. Notably, a partnership with Kennedy Lewis is expected to enhance performance further.

Healthy Cash Position

Azimut maintains a robust cash position with over EUR 1 billion in gross cash and cash equivalents. Out of this, 60% is readily available to support growth initiatives, while the remaining 40% is earmarked for regulatory capital, operational needs, and other requirements across its extensive operational network of over 130 companies.

Insights into Revenue Streams

The quarterly revenue increase of EUR 4 million year-over-year was driven largely by significant performance fees from the insurance sector and contributions from private market funds. Total costs increased 8% to EUR 190 million, with distribution costs rising due to marketing investments and variable costs associated with product placements that exceeded targets.

Future Prospects with the New Banking Initiative

Azimut is advancing its New Bank initiative, designed to establish a digital banking platform that will enhance its service offerings. The spin-off, expected to conclude in the next 6 to 9 months, will position the bank favorably in a competitive landscape, attracting strong interest from potential buyers. This move is anticipated to unlock significant shareholder value through an IPO, allowing Azimut to retain less than 10% equity to avoid certain regulatory pressures.

Market Positioning and Challenges

While Azimut has strong market positioning, it remains vigilant regarding potential market fluctuations that may impact profitability. The management highlighted a slight erosion in margins attributed to lower-margin mandates and an ongoing reallocation toward bond products. They emphasized that recent underperformance relative to rivals is viewed as a temporary inflection point in a challenging market environment.

Capital Management for Growth

Looking ahead, Azimut plans to manage its capital efficiently, utilizing proceeds from the New Bank to potentially execute share buybacks, reinforcing its commitment to generating long-term shareholder value. The management is keen on maintaining investment in growth opportunities while assuring stakeholders of their operational soundness and commitment to delivering results.

Earnings Call Transcript 2024-Q1

[Operator]

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Azimut Holding First Quarter 2024 Results Conference Call. [Operator Instructions] At this time I would like to turn the conference over to Mr. Gabriele, Blei, CEO. Please go ahead, sir.

[Gabriele Blei, executive]

Thank you very much, and welcome to everyone. We will go through the presentation as usual as quickly as possible in order to leave time for Q&A. So if you wish to start on Slide #4, just a quick snapshot of the key results in Q1 2024, EUR 1.5 billion of net inflows up until March. If you include April, this goes up to EUR 2 billion. Total revenues in the quarter of EUR 351 million and an EBIT of EUR 161 million. We do close with a net profit adjusted of EUR 122 million, and the adjustment is, as we have been used also in 2023 to take into account the IFRS 17, which has during the quarter an impact of negative almost EUR 6 million, which we are readjusting.Moving to Slide #5. We wanted to give you 3 key highlights, given the recent discussion we had with investors and analysts in order to provide some light on a couple of things. First, we are reconfirming the targets of EUR 500 million net profit and more than EUR 7 billion of net inflows also thanks to the partnership. We do have a very strong confidence in exceeding those targets, thanks to the quarterly results that we are presenting today, as well as the latest company updates that we have provided over the last couple of months. Kennedy Lewis, just to mention as the spin-off of the Italian financial advisory network as well as other transactions that we are discussing, and we hope to update you soon in order to extract further value for the shareholders.Second aspect that is quite important for us, the strong cash position of the business. We do have more than EUR 1 billion in gross cash and cash equivalents, as you have seen, and we will see later in the net financial position. Of that, we wanted to provide a quick snapshot because the rumor that we are hearing that the cash position is not as sound as one should be able to grasp just by looking at the numbers is something that annoys us very much, and we wanted to provide some insight on the fact that 60% of this cash is freely available, which means that we can tap into in order to grow the business further as well as complete the deleverage process, which by now should be in everyone's mind given the net -- the bond expires at the end of this year, and we will be repaying this debt.The rest, which accounts, roughly speaking, for 40% is allocated for regulatory capital, operating cash needs considered we do have within the group more than 130 companies that are operational every single day. Property reinvestment and other initiatives. So this 40% does not mean that we do not have access to this cash but we may tap into it if needed, but we would require just more time in order to have access to this cash. And on top of this, we need to take into account some tax implications as well as inefficiencies given that we operate, as I mentioned before, in multiple jurisdictions.Third point, which we will have some dedicated slides further on, an update on the New Bank. The perimeter has been defined as promised at the time of the announcement. We took a month time to finalize the figures. We can confirm that around 1,000 financial advisers, around 35 employees and around EUR 24 billion in total assets are going to go in the perimeter of the New Bank. As we have been able to discuss with some of the investors we have met, we do -- we are experiencing strong interest by potential buyers, and we keep on having multiple discussions with several banking and financial partners. Consider that we are already working to determine the accounting perimeter that we will be subject to the transfer.Moving to the following slide, the usual snapshot of total assets and net inflows in terms of average assets, we are growing 9% as far as the managed component is concerned to almost EUR 62 billion. And in total assets are growing 14% to EUR 93 billion.Moving to the following slide, breakdown of the inflow by product and region. As you can see, it's quite a wide spread, the contribution benefit of the diversification that we have been pursuing since more than 10 years by now. We have EUR 560 million coming from Italy, thanks to the robust private market inflows as well as solid demand from our fund solutions and the ramp-up phase of the UniCredit partnership that is slowly contributing to our numbers.As we have had the chance to say several times, please, we are not now in the position to disclose further detail on the UniCredit in order to respect our partner's current situation, and we will not disclose for the time being further numbers. As far as the EMEA region, the main contributors are the UAE region as well as Switzerland, Together, they make up more than EUR 100 million in the quarter, and they are continuing to contribute also in the month of April. Turkey is just experiencing a seasonal effect. This is quite often the case when there is the Ramadan period but we are, given the track record, able to say that normally we can reabsorb and continue to grow in the following months. The APAC region is strongly contributing with EUR 450 million. The bulk of it is coming out of Australia with the organic growth that has been quite significant in the first 3 months and should continue also in the coming quarters.Lastly, the Americas, we did have the successful launch of the GP staking fund. This is a fund that basically does what Azimut has done since 2020 in the GP staking business in the U.S. But we are launching a fund in order to involve our clients and investors into the strategy which following the Kennedy Lewis transaction has even more capabilities demonstrated. We did make the founder close. We are hoping to be able to do a second close given several very interesting and large institutional investors that are finalizing their internal decision-making process. Last but not least, Sanctuary is continuing to contribute. And as we will see later in the slide, we expect this to accelerate in the coming quarters.Moving to Slide #8. This is the usual snapshot, not much to say. It's not the fact that the 3 major markets continue to be the U.S., Australia and Brazil as far as the foreign business is concerned, with the U.S. trending north given the development that we have announced.Moving to Slide #9, just a quick snapshot of something that Alessandro will discuss with you later in detail. Total revenues are spent at EUR 351 million, a development of 8% year-over-year. If we look at the breakdown on the top right part of the chart, we do see a management fee component developing to EUR 289 million, a positive development vis-a-vis Q4 and still an increase vis-a-vis the first quarter of 2023.When it comes to the quarterly developments, we can -- the EUR 7 million increase is explained for a very large part, so I would say EUR 6 million, thanks to our Italian business that has grown both in terms of our usage product range as well as our alternative private market offering. If we compare this with the year before, the growth has been driven by the international business as well as the private market contribution.Moving to the recurring margin. You see a slight erosion in Q1 versus Q4. This is nothing that concerns us. It's just linked to some lower-margin mandate and advisory business as well as a bit of a reallocation in favor of bond products that typically is reabsorbed over the coming quarters. So nothing to worry here.On the performance fee line, we did have a positive performance from the private market funds. So it's one of the very first sign that we should be able to expect this going forward in the coming years. But most importantly, the biggest contribution comes from the insurance business with EUR 28 million within the EUR 50 million that you see in the insurance revenue line with the recurrent component within this fee line stable year-over-year as well as on a Q-on-Q basis.Last, but not least, other revenues are at EUR 11 million, up vis-a-vis the first quarter 2023. This is mainly explained with the client activity as well as an increase of the contribution from our corporate and investment banking businesses.Moving to the cost and the bottom line on Slide 10. Total cost of EUR 190 million, up 8%. I want to start from the distribution cost component to say that the EUR 7 million increase vis-a-vis the first quarter 2023. We can say that 50% of that increase is linked to some variable costs that we have decided to incur. And I'm specifically referring to marketing and event costs related to the Italian distribution network. On top of this, we did incur some costs in the quarter related to third parties rebate linked to some product market funds placement given that they have exceeded the target that we had in the contract. And lastly, we are provisioning full variable incentives to the Italian FAs based on the fact that we have certain objectives to reach EUR 500 million of net profit and net inflows that from a conservative standpoint we typically account in full by provisioning the full amount of the variable incentives.SG&A, I would say, flat year-over-year and declining versus Q4, which is seasonally Q4 higher due to bonus payments. So nothing much to add on this line, whereas on the D&A and provision of almost EUR 9 million we are basically trending backwards to the normalized level given that we are no longer benefiting from the release and the provision that we had over the course of 2023. We do close with an EBIT of EUR 161 million, up 8%, 46% EBIT margin flat across the board, so very much consistent with the previous year results. And net profit, as I already mentioned, of EUR 122 million or 53 basis points in terms of margin, which is trending in line with Q4 2023.Moving to Slide 12, the usual snapshot of our weighted average performance. Over the medium term, we like always to represent this as a good way of transferring to you what clients are benefiting in terms of performance, net of our cost vis-a-vis the industry. So still there is quite a good gap. Year-to-date, we are up until a very decent number I received a couple of hours ago, 4%. So again, we are anything between 80 to 100 basis points in excess of the benchmark.Moving to Slide 13. Funds breakdown, nothing major in terms of change. This is the usual snapshot, as we have discussed there is an increase in the bond component both in terms of category and underlying assets, which explains the margin development I mentioned before.Slide #14, we do have a continuation of the strong development of our private market initiative. Clearly, we have represented also the April numbers to be able to transfer to you the impact from the deconsolidation of Kennedy Lewis, Pathlight, given the transaction we did with Kennedy Lewis as well as the contribution in kind of Pathlight into the GP staking fund that we mentioned before.Moving to Slide 15, a quick deep dive on the Kennedy Lewis transaction. As you may recall, we executed the transaction in the middle of COVID back in 2020 into this opportunistic credit manager fantastically well run by David and Darren. They had, at the time, EUR 2.3 billion. When we exited, they achieved EUR 14.2 billion. So a very strong performance, thanks to a very long-term and growth vision of their founders. The type of transaction we did back then was based on the fact that 90%, if not more of the investment that Azimut made what has been reinvested in the business or the alignment of its interest, which is something that we always care within Azimut was absolutely perfect. The value creation has been strong across those years because we support them in their -- in the rollout of the business and in growing the business. We did support them in the acquisition of the York Capital's CLO business as well as our network has been activated to raise more than EUR 100 million in terms of assets into Kennedy Lewis products, which will continue to be managed by the team with whom we have a very fantastic relationship. So nothing changes from the investment management standpoint.The exit was done thanks to a very interesting proposition that the founder had from Petershill. We do think that Kennedy Lewis deserve a strong partner for the next leg of the development. We were asked if we were interested in exiting, and clearly, given the very good transaction that we were faced with, we decided to step out. During those years, we did earn also some dividend in terms of recurring cash flow streams. So the EUR 225 million of cash consideration that we have already received has to be topped up also with the dividend stream that we did cash in. The capital gain of this transaction will be recorded in the second quarter within the finance income line, so below the EBIT, and we will certainly be able to update you more during the first half result presentation.Moving to Slide 16. This is a transaction that Sanctuary has just completed a couple of days ago. Sanctuary has been in talks to acquire and executed the acquisition of tru independence, an advisory firm that provides services to RIAs in the U.S. And clearly, with this transaction, Sanctuary and tru will be able to deploy a number of services just to any RIAs out there, whether they want to be onboarded in full into the Sanctuary platform or they want to remain independent but have the access to the services of -- through Sanctuary. We do think that with this transaction, there will be revenues and cost synergies. Clearly the financing of this transaction has been possible thanks to the convertible bond that Sanctuary agreed with the private debt product of kennedy Lewis some years ago. So all in all, a very strong transaction that generates a company with 120 independent wealth management firms, EUR 42 billion of client assets. When we did enter Sanctuary, Sanctuary had EUR 7 billion, EUR 8 billion of assets, so quite a significant run since then.Moving to Slide 17, private market update. These numbers take into account the deconsolidation of Kennedy Lewis. As I mentioned, the major difference is in the split by asset class, which now has been recalibrated with private debt at 28% and private equity at 27% and the biggest share is coming from the real asset and infrastructure fund that we have closed here in Italy with almost EUR 800 million of AUM.Moving to Slide 19, a deep dive on the New Bank project. Just as a reminder, the Phase I that has been announced on the 28th of March was based on the creation of a digital banking platform where we will have a banking license in a NewCo that will be able to collect deposit and benefit clearly from the interest margin that we are seeing still as a very strong driver of the bank's net profit growth.In April, so again after just 1 month, the spinoff of the perimeter has been defined. So we can confirm the numbers that we had anticipated a month ago. Azimut will remain with around 850 financial advisers and EUR 26 billion of the total asset, i.e. the total perimeter of assets that we have in Italy. The New Bank will benefit from 1,000 colleagues financial advisers and EUR 24 billion of total assets. Strong interest of the potential buyers. We do confirm this. There are, I would say, multiple discussions at this stage with several partners. And we do confirm that the interest is up to providing the partner with a stake of no more than 50% in the first phase. We will certainly be able to provide an update within the next quarterly results, if not earlier.Phase 2 in the second slide, so 20, the spin-off will be executed within 6 to 9 months. And simultaneously we will be working with the stock exchange regulator and the Bank of Italy in order to make sure that this new entity will be able to get a listing on the Italian Stock Exchange where Azimut will hold less than 10% in order not to be subject to the CRD for regulation. The proceeds of the IPO, we do expect to be able to unlock significant value with the proceeds that will be reinvested in Azimut Holding growth story that has been touched since 2004 when the company went public, as well as executing potential share buybacks. So on the one side, we do have the willingness to continue to invest in the business, in the people in creating a new venture for Azimut as well as trying to extract value through buybacks. For no reason we will accept anything different than that.What stays in Azimut, just to reiterate it one more time, is the Italian distribution system that we have mentioned, so the 850 colleagues with EUR 26 billion. The asset management platform, both public and private, the partnership with UniCredit as well as some selected fintech and corporate investment banking activities and the entire international business. Why do we do all this? And why we don't think that there are execution risks nor potential conflict between the 2 companies in terms of competitive landscape. You see the numbers, Azimut occupies a significant share in terms of market share, but still is -- still a small player within the industry on every matrix that you wish to take into account. So we do -- we are convinced that there is significant growth potential for the entire franchise, whether within the bank or within Azimut Holding.I will leave the floor to Alessandro for the first quarter financials, and then I'll close with the outlook.

[Alessandro Zambotti, executive]

Thank you, Blei Gabriele.We can move to Slide 23. As usual, you have the first part of the P&L. In terms of total revenue, as we already commented, we increased compared to the first quarter '23 by EUR 4 million and EUR 25 million if we compare with the first quarter '23. In terms of operating cost, we are almost flat despite an increase of EUR 40 million if again we compare with the first quarter '23. So in terms of operating profit, we have a variation of EUR 4 million versus Q4 and EUR 10 million versus Q1 '23. I mean in terms of the evolution of the total revenue, we have the significant positive impact of the insurance revenue coming from a significant contribution in terms of performance fee. Variable fees despite the fourth quarter. As you know, the first quarter normally is very low in terms of contribution, in particular the international business, consolidate the performance in the first 6 months. Therefore we will see a bit more in the following quarter. So just EUR 1 million, again coming from private markets and a few mandates from the international business.Management fees increased by EUR 7 million if we compare with the last quarter '23. As we already explained, is a positive contribution from the private market funds. We have obviously a positive market effect. And this -- I mean, both these 2 positive effects has been offset by the allocation of the asset mix of our clients. As I said, the level of the cost, we are almost flat with a combination of the factor. At the level of the distribution costs, we increased by EUR 2 million. As we stated at the beginning, part of this variation is mainly explained by variable costs linked to [indiscernible] Italy bank that characterized the first quarter also following the communication to the market. On the other hand, the personnel and SG&A decreased by EUR 5.5 million. But as well we remember that fourth quarter consolidated part of the bonus and the exceeding of the results in particular coming from the international business. And at the level of the amortization, we are back to a normal evolution and normal impact in terms of cost that is mainly due to the fact that last year we were benefiting from a release of a different provision. In terms of revenue margin, as in the operating margin, we have 46%, 45% in the last quarter, therefore a positive increase of 1%.Moving to the next slide. I would say that there is no particularly significant effect under the operating profit, therefore focusing on finance income. The main contribution is always linked to the realized and unrealized gain and loss on investments, in particular, EUR 6 million. Positive effect coming from the net interest recognized on our liquidity cash that we have on the account. And I mean, this effect has been offset by the IFRS 17 that has been allocated as per last quarter on this slide.Moving then to the net financial position. So Slide 25. We have a net financial position of EUR 532 million, that increase of EUR 142 million compared to December '23. I think that the reconciliation can be easily performed taking into account the profit before taxes, therefore, EUR 161 million, then taking out the effect of the M&A and the taxes that we paid during the quarter. On the other side, we are not including the cash dividend of EUR 1.40 and the future cash coming from the sale of the stake of Kennedy Lewis.I'm going to leave back to Gabriele for the outlook.

[Gabriele Blei, executive]

Thank you, Alessandro. Thank you very much. The outlook is self-explanatory in terms of Slide 27. Allow me to just give you 3 very short messages. Azimut has always delivered its objectives and 2024 will not be different. So rest assured that this is what drives us every morning. Second, we are investing and we are working on a number of projects that we have discussed and hopefully a few others will come into play. And this is done to maximize the value of the business. And the alignment here is also very strong, given that Timone Fiduciaria with its 2,000 individuals that work within this firm has a common objective vis-a-vis the market. Lastly, I just wanted to stress one more time because I had the chance to go around quite intensely over the last couple of weeks to clarify certain noises that were around. And I just wanted to make sure that no one has to have any doubt on the soundness of our financial results, on the capability to repay our debt, on the capability to grow our business and to remunerate the shareholders as we have always done in our history. So rest assured that we are fully committed and fully aligned to generate value over the next 20, if not more years. Thank you.

[Operator]

[Operator Instructions] The first question is from Lam, Hubert of Bank of America.

[Hubert Lam, analyst]

I've got 3 of them. Firstly, on the $500 million profit target, which you reiterated, I assume it includes the gain on sale from the Kennedy Lewis stake. So how come you didn't move up the profit target then? Or can we assume the $500 million target from before is still relevant which excludes the Kennedy Lewis stake sale? That's the first question. The second question is on the cash. So thank you very much for it. So I just wanted to confirm, of the $1 billion of cash that you have, how much of it is at the holdco and not backing regulatory capital? And my last question is on [ Nova ] -- sorry, not Nova, the NewCo. Have you done more work on potential capital requirements that NewCo would need and any capital injection, it would be hard to have?

[Gabriele Blei, executive]

Thank you very much, Hubert. So I'll start from the first one, the EUR 500 million target and why we didn't push it up. I think that by now we can all agree that nobody cares on Azimut target, whether they are aggressive or not aggressive, whether we push them up or we reconfirm them during any given years in which markets are against us and people do not believe in our targets. I think no one, including you, have in the last 5 years been able to ever get close to our target at the beginning of any given year. So the decision of the Board has been that of simply reconfirming the target, as always, making sure that people could appreciate the fact that given the recent transaction, given the development that we are experiencing and all the things that we are carrying on will, after just 3 months, allow to say that we do have a very high confidence and visibility to exceed the EUR 500 million target. We stand with that because doing anything more hasn't proven to be valuable to investors nor to the interaction we had. So we're just providing you some colors on why we think that we have a high degree of confidence. As far as the cash, and then if Al wants to add, we do have the EUR 1 billion spread across a number of companies. We do a cash pooling exercise on a regular basis. I would say that given that the business has to operate every single day, we simply know that a portion of that cash, which is a fraction of the 40% that is not readily available sits in the 130-plus companies, which is against our interest to pull it out because it means that those companies will not have operating nor regulatory capital to continue their business. So as the business is an ongoing concern, we want to make sure that this is taken into account the correct way from now on. As far as the NewCo capital, I think it's premature to provide numbers on how much capital is needed. It will depend on the ultimate structure and the ultimate partner as well as -- forgive me, on the speed of growth of the deposit base that we will be experiencing when we will be having the banking license.

[Operator]

The next question is from Perini, Elena of Intesa Sanpaolo.

[Elena Perini, analyst]

I've got 3 questions. The first one is the taxation that will be applied to the capital gain on the disposal of the Kennedy Lewis stake. Then considering that you have deconsolidated the assets relating to Kennedy Lewis, are you going to provide a new target on the private markets AUM or will you maintain the 15% on the total of AUM? Then the final question is on the trend of performance fees in this first part of the second quarter. I heard that actually the international business is recording them more in the second quarter than in the first quarter, but I don't know if you can provide some more color also on the other parts of the business.

[Gabriele Blei, executive]

Indeed, you're right. Typically the international business collects and book performance fees on -- during the first semester and the full year. So the bulk of the contribution comes from the international business in those moments, although there are some other products and minor contribution that we did experience in Q1, but nothing of a significant and material level. On the taxation of the Kennedy Lewis proceeds, most likely we will be in the region of 23%, 25% which is something that we're still finalizing with our tax advisers, given the several implications that we have to take into account. On the new target of AUM, following the deconsolidation of Kennedy Lewis, no, we will not provide you with guidelines -- we do have our internal objective in terms of inflows into private markets for 2024. But clearly, when we will come out with the new business plan next year, we will most likely have to reset and take into account the different weighting of the private market assets over the total assets. At that time, the spinoff will most likely be completed. So we figured out that it was quite pointless at this stage to provide with the new real target for 2024. Instead, our focus remains on the objective of the pipeline of products that we want to launch between now and year-end as well as the inflow activity that our financial advisers have to accomplish.

[Operator]

[Operator Instructions] The next question is from Domenico Santoro of HSBC.

[Domenico Santoro, analyst]

A couple of questions on number because when I see your performance in terms of commission quarterly performance, you have been underperforming a little bit the other competitors in Italy also margin, you mentioned some slippage that is a little bit counterintuitive given what is happening on the financial market. So I just wonder whether from this point you see this as an inflection point and a sort of improvement going forward? So that's the first question. The second instead is you were saying before, if I catch correctly, that you're going to give some information to the market from here to the next quarterly numbers about the project. I didn't catch correctly whether this might involve already announcement of the partner or anything related to some different aspects for the project, of the project because that's my mark as sort of an acceleration, which will be welcome. And coming back to the timeline of the project, that is quite complex, I know. I remember that you mentioned that part of the cash can be used for share buyback, and that might be in a way back-loaded at the end of the project. But what could be the timeline for that? I appreciate this, if also you can give some hints, specific time in that respect.

[Gabriele Blei, executive]

Thank you very much, Domenico. So first question on the margin and inflection points. As always, when markets are kind of rough, there is a time lag between when margins start to recover and the performance of the underlying market. So there is not an immediate transmission from volatility/negative trends into repositioning into higher-margin products. Just as a reminder, 2023 was a super-complicated year because up until October it was kind of gloom and doom and we had experienced a very significant run-up which we were all pleased because clients ended with positive performance in the portfolios, and we recovered a sluggish performance that we had generated up until then. We did see some reallocation continuing in the first quarter, but nothing that concerns us. As you might recall, sometimes we mentioned that typically the big swings can go up and down plus or minus 15 basis points. We are, I would say, there now. So unless there is an inversion in market and volatility kicks in, but I think that we are scratching the bottom of the margin volatility that we have experienced given a negative 2022 and a complicated, to say -- to put it in this way, 2023. The future announcement on New Bank and your second question, you correctly understood in the sense that I did not mention specifically what kind of announcement we might be able to give. But certainly our intention is to go as fast as we can. We are encouraged by the strong interest we are receiving on this project. And the idea is to keep the market updated and all the investors updated given that the sooner the name of the partner or the sooner more detail will be shared with you, the better for the clarity behind the project, given that there is this concern about the execution risk, which following the split we see as minimal and just related to a market transaction that we are pursuing. So if we are well-positioned, we will be able to update you even before the next quarterly update, if not certainly during the next quarterly update, there will be some detail and information new compared to what we are discussing today that we will be willing to share. The timeline of the share buyback, as we have approved the new buyback program at the latest AGM, this is the regular approval that we ask during our annual shareholder meeting. So from the -- that standpoint, we have the flexibility to proceed. Clearly what we are saying is linked to the proceeds of the transaction there can be, and there will be some share buyback that we can perform. So everything depends on the correct execution and final proceeds that we will receive from the New Bank project that we need to complete. So for the time being, if there is going to be an opportunity, we do have the flexibility to proceed with the buyback given the approval from the latest shareholders' meeting. When it comes to what we will be doing with the proceeds, I think we had to wait for the group [result] before we can consider a share buyback program related to the cash-in.

[Domenico Santoro, analyst]

But the time line of this project remains the same, meaning that --

[Gabriele Blei, executive]

The timeline remains the same.

[Domenico Santoro, analyst]

-- is the [indiscernible] and then presumably the proceeds, what you're going to do with that?

[Gabriele Blei, executive]

With the proceeds of coming from the completion of the New Bank?

[Domenico Santoro, analyst]

Exactly, exactly.

[Gabriele Blei, executive]

This is something that, as we mentioned, we need to make sure that people continue to believe in the equity story of Azimut Holding. The equity story of Azimut Holding is based on investing the cash flow that it generates for the leverage that it has taken out and growing the net profit and the franchise of this company. When we listed the company, we had 700 colleagues in the network and something more than EUR 7 billion. And from then, we have done lots of things that brings us to today in terms of numbers. This is what will drive us in terms of allocating the proceeds coupled with clearly the possibility to execute the buyback, given that it's one good way to increase the value of this company.

[Domenico Santoro, analyst]

Can I ask you another detail, if I may? Sorry to be long?

[Gabriele Blei, executive]

No worries. We have plenty of time.

[Domenico Santoro, analyst]

I'm sure you have this detail at hand. Is there any chance to know how much of the shares related to Timone they sort of unlocked over the next 2 years?

[Gabriele Blei, executive]

For the time being 0, in the sense that we are not looking to unlock any shares at the completion of the IPO of the New Bank. If the question is, but over time would you unlock some shares related to the financial advisers that are going to be working within the New Bank? This is a possibility. We haven't decided on a number nor an approach to adopt, but it's not going to be the full amount of shares held by any single advisers given that there is the willingness to retain advisers, those working within Azimut Holding or those working within the New Bank, aligned and committed to the future of the New Bank and Azimut Holding. So there is no immediate need to free the entire shareholding of any --

[Domenico Santoro, analyst]

Probably I apologize if I'm mistaken that. What I meant was more the shares that in theory, financial advisers, they can sell because of the aging requirements and everything else.

[Gabriele Blei, executive]

But the aging goes with the rules of the shareholders' agreement. As you may recall, there is a 75% lockup on the shares when they are both. And then this percentage goes down from 75% down to 25% locked up in the following 9-year period at different stages. We don't expect on -- upon the execution of the transaction to free the shares of the advisers that will be within the bank. So I wouldn't expect major swings in Timone's participation in Azimut Holding in the immediate aftermath of the signing and completion of the New Bank.

[Operator]

[Operator Instructions] Gentlemen, there are no more questions registered at this time. Do you perhaps have any closing comments?

[Gabriele Blei, executive]

No, just thank you for your attention and questions. My colleagues and myself are available for any further follow-up, and we wish you a very good day and night. Bye-bye.

[Operator]

Thank you. Ladies and gentlemen, thank you for joining. This conference is now over. You may disconnect your telephones.