FinecoBank Banca Fineco SpA

MIL:FBK

Earnings Call Transcript 2021-Q2

[Operator]

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the FinecoBank First Half 2021 Results Conference Call.

[Operator Instructions]

At this time, I would like to turn the conference over to Mr. Alessandro Foti, CEO of Fineco. Please go ahead, sir.

[Alessandro Foti, executive]

Good afternoon, everyone, and thank you for joining our second quarter results conference call.

Before we start going through the details of the presentation, let me please underline that last quarter once again confirmed our new dimension of structural growth. We are progressively delivering on 2 strategic discontinuities that we anticipated during the first quarter conference call in order to progressively become more a platform fulfilling the financial needs of our clients than a bank.

First, we are carrying on our initiatives in order to deleverage our balance sheet, which will, in turn, progressively increase and improve our revenues mix, boosting fees and commissions. Of course, the mix of net sales during the summer months might show an increase in deposits compared to the recent month, but this effect is only temporary and just linked to the seasonality. Therefore, we expect to reabsorb [ it ], thanks to our increasing effectiveness in transforming liquidity into assets under management.

Second, Fineco Asset Management is already delivering in its strategic discontinuity and is taking more control of the value chain to further accelerate our Investing revenues and margins.

The outcomes of our strategic discontinuities will be a structurally higher profitability thanks to the jump of Investing revenues and the capital-light business model thanks to the deleveraging, as we will have structurally higher room to dispose of it. This will allow us to distribute a higher level of dividends and, at the same time, to invest more for our growth.

Let me highlight that also in the first half of the year we recorded a record-high net profit, reaching EUR 185 million and increasing by 2% year-on-year despite the contribution to systemic charges in the year due to the Single Resolution Fund paid for the first time in 2021. This result is even more valuable considering that it's been achieved in a new normal world and beats the previous record set in the first half of 2020, which was characterized both by low operating costs due to the strict lockdown in place in Italy and by the strong performance of Brokerage due to volatility peak.

Revenues stood at EUR 403 million, increasing by 3% year-on-year, excluding nonrecurring items of 2020 and mainly supported by the growth of Investing thanks to the growth in assets under management and the operational efficiency by Fineco Asset Management. Brokerage confirmed a structurally higher floor, also in an environment characterized by a much lower volatility compared to 2020.

Operating costs were well under control, and the cost/income ratio stood at 31.3%, confirming operating leverage as a key strength of the bank. Our capital position confirmed to be strong and safe, with a Common Equity Tier 1 ratio at 18.6%.

Let me please underline that after the decision by European Central Bank not to extend beyond September 2021 the dividend ban and following the dialogue with the supervisory authorities, the Board of Directors has proposed to distribute a dividend for 2019 and 2020 equal to EUR 0.53 at the next shareholders meeting, on October 21, 2021.

Also, our commercial activity continued to strengthen compared to the impressive growth experienced in 2020. After the record net sales registered in the first half, estimated figures for the month of July are around EUR 900 million, increasing by about 34% compared to July 2020. The mix confirmed to be strong, with about EUR 0.5 billion in assets under management and almost EUR 360 million of deposits due to the summer seasonality. As already said, we expect to absorb this temporary increase in liquidity, going forward, also thanks to the pipeline of new initiatives that we are delivering.

Brokerage revenues are estimated for July at around EUR 15 million. This is very good news, considering the favorable market conditions due to the both low volatility below the average level of 2017-2019 and low volumes. Nevertheless, revenues are around 30% higher compared to the average monthly revenues in the same period, confirming once again that the floor of the business is now definitely higher.

Let's now move on to Slide 5. Before we start going through the details of the presentation, let me please underline that in order to give a better representation of Investing fees and in line with prevailing market practice, in the quarter we went through a recast of some items related to our Investing business previously accounted in other lines. In this slide, you can find all the details.

In particular, we included within the Net Commissions, cost efficiencies achieved by Fineco Asset Management previously accounted under Other Income line. Second, costs related to the network of financial planners, like recruiting, loyalty, FIRR and Enasarco, previously accounted under Other Administrative Expenses. On top of this, financial planners' incentives that were previously accounted into other product areas have been recasted into Investing fees, following the change of the financial planners' incentive scheme.

Please let me add that in the past we had to apply the accounting rules in line with our previous parent company, which were not taking into account the features of our business model. Therefore, in the past we structurally overestimated our cost/income ratio. And this representation now better reflects our real operating leverage as an asset gatherer.

Let's now move on to Slide 6. As announced, we reached very strong industrial results also in a new normal world, with adjusted net profit standing at EUR 184.6 million in the first half, plus 2% year-on-year on a like-for-like basis despite the higher contribution for systemic charges.

Among the adjustments of the quarter, let me underline that we have recorded a EUR 32 million one-off fiscal benefit related to the realignment of intangible assets under the Legislative Decree 104/2020. Revenue stood at EUR 403.5 million, up 3% year-on-year, as we have been able to catch the strong acceleration of the structural trends in place, mainly thanks to the contribution of Investing. Operating costs stood at EUR 126.1 million, increasing by 4.7% year-on-year, excluding costs strictly related to growth of the business. We will deep-dive on costs later on during the presentation. Cost/income confirmed to be very low, at 31.3%, despite the continuous expansion in assets and clients, thanks to our strong operating leverage and to the scalability of our platform.

Let's now move on to Slide 7 and start to analyze more in details the dynamics of our results. In this slide, we show our net financial income, amounting to EUR 148 million and remaining flat in the first half of the year. Net interest income stood at EUR 124.3 million, despite the worsening of interest rates environment, and profit from Treasury Management stood at EUR 23.6 million.

As you know, the more we will be effective in deleveraging the balance sheet, then the more we will be able to slow down and possibly even reverse the growth of our financial investments. This will lead to recurring industrially driven profits from Treasury Management and progressively improve revenues mix with a higher component of fees and commissions. We will come back later on, on our initiatives related to the deleverage of the balance sheet, some of which are about to enter in action, like the third-party savings account platform.

Let's now move on to Slide 8. Fees and commissions stood at EUR 214.3 million in the first half of 2021, growing by 10.2% year-on-year, mainly thanks to the positive contribution of Investing. Brokerage, net of commissions and trading profit, confirmed once again a floor structurally higher compared to the past, despite the unfavorable market conditions in terms of volatility and volumes compared to both the first half 2020 and the first quarter 2021.

Let's jump on to Slide 26 to deep-dive on our Brokerage business. Brokerage confirmed once again that after the recent events, the floor of the business is structurally higher compared to the past, regardless of the level of volatility. As you can see in the chart on the top of the slide, in the second quarter 2021, overall Brokerage revenues reached EUR 49.4 million in a period characterized by low volatility and volumes, resulting, nevertheless, in a monthly average 46% higher compared to the average monthly revenues in the period 2017-2019.

The month of July, estimated Brokerage revenues were equal to EUR 50 million, around 30% higher compared to the average monthly revenues in the period 2017-2019 and with a volatility that was lower than the average volatility of the same period.

Let me remind you that the growth of the Brokerage business is driven by the contribution of 3 structural components. First, the deep reshape of our Brokerage business. Let me remind you that we have recently launched a new U.S. options platform and that we have now entered in the authorization phase for our leveraged certificates offer. On top of this, we are starting the study phase of the investment certificates.

Second, the client base using our platform is widening, with active investors that have grown significantly in absolute numbers, standing more than 40% above the average level of 2018-2019. Please note that our active investors have an average of 4 executed orders per month, are wealthy people in their 50s with assets above EUR 200,000, on average, and the vast majority of them has a relationship with our financial advisers for the long-term planning of the financial wealth. Third, we are continuously increasing our retail market share.

Let's now move on to Slide 9 for a focus on Investing. Let me remind you that over the last few months we have experienced a strong acceleration towards asset under management, as we have been able to catch the structural trends in place in Italy. The acceleration of the Investing business is expected also going forward, as we are progressively going through the strategic discontinuity in Fineco Asset Management that will allow us to improve the efficiency of the value chain, generating higher revenues and margins.

Investing revenues amounted to EUR 122.2 million in the first half 2021, increasing by 22.7% year-on-year thanks to the volume effect and strong net sales into assets under management, driven by higher contribution by Fineco Asset Management. More in detail, management fees increased by 25% year-on-year in the first half of the year, while in the second quarter 2021 increased by 33.1% year-on-year and by 8.1% quarter-on-quarter. Let me please highlight that management fees margins after tax are slightly increasing, to 46 basis points, showing a first signal of higher risk appetite by clients.

Let's now move on to Slide 10 for a focus on our costs. This slide confirms once again efficiency to be part of our DNA and core in our bank, representing a clear and unique competitive advantage. Let me please underline that the first half of the year was characterized by costs directly related to the strong acceleration of our growth dynamics in the new normal world. On top of this, the yearly comparison is affected by the strict lockdown in the first half of 2020 driving non-HR costs lower compared to the average level of the period 2010-2019.

Operating costs in the first half 2021 stood at EUR 126.1 million, growing by 4.7% year-on-year excluding costs related to the growth of the business: mainly additional EUR 1.7 million in marketing costs, mainly in U.K. and not fully in place in the same period of 2020; additional EUR 1.4 million cost for Fineco Asset management that is preparing itself for further expand its business, allowing us to have a higher control of the investing value chain.

Going into the details, non-HR costs stood at EUR 73.2 million. Excluding the previously mentioned expenses related to the growth of the business, they only grew by 4% year-on-year, confirming our strong operating leverage.

Finally, staff expenses stood at EUR 52.9 million in the same period, increasing by 5.6% on a yearly basis, net of costs related to the expansion of the business of Fineco Asset Management.

Let's now move on to Slide 13 for a focus on our capital ratios. Fineco confirmed once again a rock-solid capital position on the wave of a safe balance sheet. Let me please underline that after the decision by European Central Bank not to extend beyond September 2021 the dividend ban and following the dialogue with the supervisory authorities, our Board of Directors has proposed to distribute a dividend for 2019 and 2020 equal to EUR 0.53 at the next shareholders' meeting, on October 21, 2021.

Common Equity Tier 1 ratio stood at 18.59%, including the 2019-2020 dividend proposal, and this is mainly explaining the quarterly decrease. Leverage ratio stood at 4.03%, including the dividend proposal, which also in this case explains the quarterly decrease. Let me please add, in line with the optionality allowed by ECB and Bank of Italy, starting from June 2021, we temporarily excluded exposures towards the central banks from the total exposures. Without this exclusion, our leverage ratio would be at 3.81%. Risk-weighted assets stood at EUR 4.431 billion, and total capital ratio stood at 29.87% as of June 2021, including dividend proposal.

Let's now move on to Slide 15. As you know, 2021 has made even clearer that Fineco is in the sweet spot for growth. In the first half 2022, the bank has been able to deliver even stronger net sales, reaching EUR 5.8 billion, with a very strong asset mix. July net sales were only the latest confirmation of this big jump in a new dimensional growth.

Let me spend a few words on the recruiting. As you can see on Slide 16, starting from last year we have experienced a strong increase in the interest of financial advisers to join our bank, thanks to our business model, which proved to be the best positioned to grow in the new landscape; also thanks to our unique FinTech DNA. In this regard, please note that we have no need to overpay financial advisers with huge upfront fees and use the aggressive approach historically taken by the industry. As a matter of fact, in the new environment Fineco emerged more clearly as the perfect bank for professionals looking to grow their home business in a sustainable way.

Those dynamics were confirmed in the first half of the year, resulting in a net increase of 125 personal advisers in our network, as we recruited 68 senior professionals and 102 junior, with net sales generated organically by the bank at 86% in the first half of the year, and much normal level.

Let's now skip to Slide 21 and start discussing about our expectations for the business, going forward. In this slide, we summarized our guidance. With regards to our Banking revenues, we expect our net financial income stabilized in 2021 and 2022 at the levels of 2020, thanks to the deleveraging of the balance sheet and to the new initiatives in place. For example, on our tax credit activity, which has already started to give a contribution in the first half of 2021, we target a potential volume in a range between EUR 1.5 billion and EUR 2 billion. Overall, Banking fees in the region between EUR 40 million and EUR 45 million in 2021. Going forward, they are expected to grow, thanks to the increase on our client base and to repricing actions.

On Investing, given the strong growth experience over the last few months driven both by the acceleration in underlying trends and by the first effects of the strategic discontinuity produced by FAM, we are again increasing our 2021 guidance, to revenues growing in a range between 20% and 25%, with resilient or slightly higher margins compared to 2020. Going forward, we are expecting strong acceleration of revenues and margins thanks to, first, a further increase in our network productivity leading to higher volumes, as we expect assets under management net sales at around EUR 6 billion per year; second, the implementation of the strategic discontinuity in Fineco Asset Management, which is going to increase its penetration in Fineco's stock of assets under management, with retail net sales expected at around EUR 6 billion per year. This will result in an increase of bank's management fees margins after tax up to around 55 basis points and pretax margins up to around 75 basis points by 2024. Brokerage revenues are expected to remain strong, with a floor in relative terms with respect to volatility that is definitely higher than in the past.

Operating costs are expected to grow in a range between 4.5% and 5% year-on-year. Please note that there might be additional costs related to Fineco Asset Management, as we are introducing the previously mentioned strategic discontinuity to improve efficiency of the value chain in the Investing business. Going forward, we expect a stabilization in running costs growth compared to 2021 in a range between 4.5% and 5% year-on-year, not including costs coming from the projects related to the expansion abroad and Fineco Asset Management.

Cost/income. We confirm our guidance of continuously declining cost/income in the long run, thanks to the scalability of our platform and to the strong operating gearing, we have this, excluding costs related to our expansion abroad.

With regards to systemic charges for 2021, we'll be in a range between EUR 37 million and EUR 39 million, booked within provisions for risk and charges, also including the EUR 2 million charges to the Single Resolution Fund already booked in the second quarter. Please note that the more we'll be affecting in the deleveraging of the balance sheet, the more we can decrease our contribution to systemic charges.

Tax rate for 2021. We expect it stable year-on-year, while going forward, we expect a reduction of around 1 percentage point per year. On our capital ratio, we expect the CET1 ratio to remain above the floor of 17% and leverage ratio in a range between 3.5% and 4%, currently with a combination of both a strong acceleration in the growth of the bank and the distribution of generous dividends. Dividend per share, going forward, we expect it constantly increasing, also thanks to the progressive delivery on our strategic discontinuities.

Cost of risk was equal to 7 basis points in the second quarter 2021, thanks to the quality of our lending portfolio that is offered exclusively to our loyal customer base. For 2021, we expect it below 10 basis points, and in 2022 in a range between 10 and 15 basis points. Finally, we expect a robust and high-quality net sales, with a mix mainly skewed towards assets under management and with a lower component of deposits, thanks to all the new initiatives we are undertaking.

Let's now move to Slide 22 to deep-dive into deleveraging. The recent events have produced a strong acceleration in the structural trends and have increased the speed at which we are growing. In order to take full advantage from our new dimension of growth and to further build on it, we have recently undertaken a wide set of initiatives that are already delivering higher-than-expected results. Let me please remind you that the new initiatives will allow us to improve our revenues mix as we are strategically evolving our business model to a fee- and commission-driven model, becoming more a platform to fulfill clients' financial needs than a bank.

Let me now go briefly through the new initiatives. First, we changed the incentive scheme of the network of financial planners that is now only linked to the net sales in assets under management. This has produced a strong acceleration in improving the quality of our net sales mix.

Second, we will further increase the productivity of the network through new software developments, leveraging on our deep internal IT know-how.

Third, also thanks to Fineco Asset Management's efficiency and strong time to market, we can count on a wider product range in order to fully catch the whole spectrum of clients' financial needs and effectively convert their excess liquidity. For example, our FAM Target and Pension funds proposition fits the best for risk-adverse clients, while the platform of third-party savings accounts, which is now live in test phase, is perfect for clients with no intention to invest in managed products.

Finally, we are improving the quality of our client base, focusing our target market on the upper end, also thanks to the repricing of our Banking services, in order to better control the acceleration of new clients from traditional banks and be more selective in our client acquisition. All this set of new initiatives will allow us to be more selective in the growth we are pursuing, resulting in a better quality revenues mix, coupled with the deleveraging of our balance sheet.

Let's now move on to Slide 23 to deep-dive on our Banking business. As you know, we have set a number of industrial initiatives to manage liquidity, improve the quality of our client base and total financial asset mix and, in the end, deleverage our balance sheet. Among these, it is worth mentioning the more dynamic management of our Treasury, together with the possibility to extract profits from our Treasury Management, linked to the deleveraging activity of our balance sheet; the increase in the appetite for lending by our clients, we've not changed to our cautious and conservative approach; the already mentioned new platform to distribute third-party savings accounts; the new pricing of our Banking services.

Finally, the new platform to manage the tax credits towards the state under the Ecobonus and Superbonus. This will help us in sustaining the net interest income with an interesting yield and no use of capital, as the counterparty of the credit is the state. Please note that we can afford to be particularly aggressive on this initiative, as our strong operating leverage allows us to cope with the complexity deriving from the granularity of the single fiscal credit to manage and thanks to the fact that we act as withholding agent for our customers on their brokerage volumes.

The results of the second quarter already show the first contribution coming from the tax credits, which we are progressively buying. Let me please remind you that we have a volume potential in the range between EUR 1.5 and EUR 2 billion.

Let's now move to Slide 24 for a deep dive on our Investing business. As anticipated, going forward, we expect an acceleration of our Investing revenues and margins thanks to a further increase in our network productivity leading to growing volumes and to the strategic discontinuity we are undertaking with Fineco Asset Management to further extract additional operational efficiency which will allow us to take more control of the investing value chain.

In this slide, we summarize our actions to further improve both the volume effect and Fineco Asset Management contribution. Our initiatives are already proving to deliver, as you can see from our record assets under management fees, which in the first half of 2021 were already close to the ones gathered in the full year 2020.

Fineco Asset Management performed even better, with retail sales already exceeding 2020 results and a further proof that our Irish company is progressively gaining commercial traction. In particular, let me please highlight that Fineco Asset Management is confirmed to be key in our move to accelerate the conversion of deposits into assets under management, and it is strongly and increasingly contributing to the group's net sales.

As you know, the increase in its volumes will result in a growth of its margin contribution, which will be further improved by the discontinuity in the internalization of the value chain. This will allow Fineco Asset Management to progressively and structurally decrease the cost of third parties through a number of initiatives like, for example, the launch of the new flagship product range fully managed in-house, new advisory services or lower cost of mandate.

I'll now leave the floor to Paolo Grazia, our Deputy General Manager, for an update on the development of our U.K. business, on Slide 29.

[Paolo Grazia, executive]

Thank you, Alessandro, and good afternoon, everybody.

First half results confirm once again that our one-stop solution in U.K. is proving to be very well welcomed and our marketing campaign is providing a strong boost to quality client acquisition. In the first half of the year, we have already opened more current accounts than in the whole 2020, and we are now developing a brand-new proprietary model to maximize the efficiency of our marketing campaign based on volatility and client behaviors.

The acceleration of our customer acquisition dynamics and the quality of our client base have been [ concerned ] in the last few months. For example, as you can see on the second graph on the left-hand side of the slide, we are improving the penetration of active clients on brokerage, representing more than 70%, on new current accounts in the first half of 2021, confirming that we are not attracting hit-and-run, highly speculative and volatile customers, but we are attracting experienced traders, loyal and looking for quality offer, a further evidence of the right positioning chosen by the bank.

And this translates in a further boost of our revenue generation. On the right-hand side of the slide, you can see revenues in the first half of the year being almost equal to the ones recorded in the whole 2020. On top of this, we are continuing to improve our revenues mix in favor of OTC, over-the-counter, and listed products, which are now the lion's share of the growth.

In Slide 30, we sum up the next steps that are getting us closer to the full launch of our investment offer. In particular, we have now ended the first step of our investing platform, as we have widened our offering, introducing more than 20 asset managers, and launched our ISA offer. We are now entering the second step, which will focus on further improving the user experience by building up easy-to-use journeys and maps to help clients choose the best investment solution based on their goals.

On a final note, as Alessandro already described, the 2 strategic discontinuities on the deleverage and on the investing will allow us to further increase our growth plan abroad. At this regard, by next year we will be able to increase our marketing expenses in the U.K., while we are preparing the setup to launch our offer in Germany by the first half of 2022, as we think that our model [ are just based ] on the features of the German market can be very attractive for local clients.

Thank you for your attention. And now I will hand it back to Alessandro.

[Alessandro Foti, executive]

Thank you, Paolo. Thank you for your time. I catch this opportunity to invite you to our IT Day that is going to be held on September 9, 2021, at 3:00 p.m. Italian time.

Now we can open the call to questions.

[Operator]

[Operator Instructions] The first question is from Azzurra Guelfi with Citi.

[Azzurra Guelfi, analyst]

Two questions for me: one on Investing fees and FAM, and the other one on capital. The question on FAM is, if I look well at your outlook you indicate a significant expansion of margin, from [ 63 ] to 75 basis points, and the majority of the flows, basically the totality, coming from FAM in the next few years. And this would imply more or less a growth of the fees around 20% for the next couple of years. Does this make sense as implied in your outlook? And when I look at the margin expansion, can you elaborate a bit more on what are the main drivers? Is it the mandate revision or new product offer and things like that? And what are the key risks you see in implementing this new strategy?

The second one is on the capital. You expect dividend per share to grow continuously over the next few years. And is this based on a 50% payout? Or given your capital and deleveraging that you would like to implement in some sort of strategy, it could result in also higher payout? Or do you expect some of the capital to be redeveloped in other growth opportunity; for example, expansion in other countries abroad?

[Alessandro Foti, executive]

Regarding -- let me start from Investing fees. First of all, the calculations you are making clearly are in the right direction. And what I would like to underline, that it's very important that you look not just to the pretax margins, but it's very important also the after-tax margins, because considering the fact that the company is based in Ireland. So this clearly it's remaining important.

The main driver and the main risk behind the strategy. The main driver is related to the risk. Let me start from the macro picture. Clearly, the environment is expected to remain extremely favorable, considering the combination of low interest rates and rising inflation, and this is accelerating the change in the habits by clients. And this is a structural tailwind in our favor.

Second, as we were mentioning, the productivity of the network. Their journey in growing the productivity of the network is just at the beginning. And so we expect a continuously growing productivity by them.

And third, clearly, there is also a change in the approach by clients, and they are more and more looking for investment solutions than just buying the single product. And Fineco Asset Management is going to emerge as the provider of this investment solution. The most recently launched set of products is a clear demonstration of that. And second, we are going to move in direction of, and we are going to remain clearly, and our business is going to remain based on the concept of an open platform, but we are going to move in a direction of a rationalization of the relationship with our partners. So we are going to have a more fruitful cooperation with a more restricted number of partners.

And putting everything together, clearly, this is going to make the largest part of the future net sales represented by Fineco Asset Management solution, and this is going to be driven by a combination of new net fees and also transformation of the stock.

The main risks. So the main risks are clearly mostly in the region of something that is not in our hands to be managed. So clearly, if we enter in a structural long-lasting market disruption, clearly, this can put temporarily on hold the strategy; not reversing, but delaying and making everything a little bit harder to be achieved. But clearly, we cannot manage the market.

Honestly speaking, I don't see any other relevant risks regarding this. It's much more a matter of execution in our hands. The bank has a quite robust track record in executing plans and so on. So we are quite confident that we can achieve these results.

And on capital. Clearly, we are not -- we think that giving a direct guidance based on the payout doesn't make a lot of sense for a bank that is on the fast lane of growth. We are in a growth story. And so we prefer to guide the market in direction of a continuously growing dividend per share trend. Because I would like to return to the concept that what the bank is doing is, at the same time, accelerating in a big way in the direction of increasing the margins; and so the profitability of the bank. At the same time, we are making a lot of progress in making our business a completely capital-light business model; and so giving to us larger room for distributing dividends.

So we prefer not entering the -- giving a guidance on the payout makes sense for someone that is not expected to have in front of them a growth story. We are a growth story. And so we are confident our dividend per share is going to continuously going up. So this is the guidance we are giving.

[Operator]

The next question is from Enrico Bolzoni with Credit Suisse.

[Enrico Bolzoni, analyst]

Congratulations on what I think are very strong results. Just a few questions on my side, please. So one is on your new net sales target. You're guiding now for roughly EUR 6 billion in retail flows. I mean to be honest, considering the number you posted recently, this seems conservative. I was just wondering if you can give some color in terms of whether indeed you wanted to be conservative providing this guidance.

A second question, partially related. So on the advisers, you had --clearly, the balancing number, if I got it right, is about 30, 40 advisers left. I just wanted to know what's the typical adviser that decides to leave Fineco. Is it because he retires? Or is it because he decides to pursue different career opportunities?

And also linked to that, you're doing quite a bit of junior recruiting. Can you give us some idea what's the difference in productivity of a junior adviser compared to an experienced one? And I presume it's lower, how long does it take for the 2 to kind of align in terms of productivity?

And then, very final question. You mentioned in the past that you are launching a SIPP in the U.K. Can you remind us of the time line for that?

[Alessandro Foti, executive]

So regarding on the net sales target, I would like to remind that is a net sales target of assets under management products and that they are nearly 100% made by Fineco Asset Management solutions. Clearly, we probably -- the overall net sales are going to be probably higher than that level.

We think that this is an extremely robust guidance. But when we are giving the guidance, we try to avoid to present to investors and shareholders a book of dreams, because it doesn't make any sense. So we prefer to present something that is using a wording like challenging but achievable. So all the guidance and results we're presenting are very robustly sustained by extremely evident and quite consistent actions. So our numbers are extremely solid and robust.

So this means that we -- clearly, our ambition is to do even better. But as the same approach we used going through this year, as probably, if you remind, we started in giving a guidance on increase of the revenues on Investing that was in the region of 15%. Then we moved up to between 15% and 20%. And how we are landing on a range between 20% and 25%. So we prefer to bring to the market something that is solid, robust and on which we are quite -- we are confident to achieve these results.

The financial planners that are leaving Fineco are relatively few of them. The most part of them is related to financial planners who are retiring. Then we have some financial planners that they are leaving the bank, but they are really very few, for joining other organizations. And then we have also the financial planners that we are getting rid of them because they are not matching the requirements in terms of regulatory respect of rules, conduct and so on. So we are continuously -- we are taking an extremely rigorous approach in determining if a financial planner is perfectly in line with our expectations.

The junior financial planners clearly are -- they have a level of productivity at the beginning that is definitely lower than the senior financial planners. So in the best case, they are reaching a high level of productivity within a couple of years. But this, clearly, is the junior financial planners particularly smart and fast in entering the new job. Usually, in average, for junior financial planners, reaching a high level of productivity usually takes more or less a 5-year time horizon.

We are perfectly aware that it's an investment we are doing. But for us, a priority is not just to be concentrated on the very short-term results, but also, for example, to be sure that we are not running the risk to have a network that is aging too fast. Because one of the most important problems for the industry, for the financial planning industry, is an industry that is rapidly aging because the industry is extremely reluctant investing in young talented persons exactly because they're not immediately productive from the beginning. But currently, our approach that has been always to be to look to the long run. Clearly, we are very interested in investing on these young talented guys that are going to represent the future of the bank.

On SIPP, I'm leaving the floor to Paolo, if you want to give an answer on the point.

[Paolo Grazia, executive]

We know that SIPP is very, very important for the U.K. offer. We are working on it. Unfortunately, it's strictly linked to the physical presence in the U.K. So we will need a branch over there to launch the SIPPs. Of course, we stopped the launch of the branch that was already planned because of the pandemic, but we are now reopening the project. So I think probably by the first half, the end of the first half of 2022, we would be able to also have a SIPP in the U.K. offer.

[Operator]

The next question is from Domenico Santoro with HSBC.

[Domenico Santoro, analyst]

A number of questions from my side. First of all, the guidance that you gave on margins because of the internalization of the production at FAM, can you give us a little bit of color on the phasing on these assets that will be internalized at FAM supporting your increase in margin guidance? In other words, I mean, today FAM has, if I'm not wrong, in terms of retail, EUR 13 billion. So as of today, on the total AUM, I calculated an increase in revenues because of this of EUR 60 million. So how much is it going to be: 25% this year, 50% next year, and then 100% in [ 2024 ]? Can you give us a little bit of color on the phasing? It's important because the more you accelerate this process of course -- I mean, you're giving numbers for 2024, but the more you accelerate this process, then the more you can get extra revenues in terms of P&L.

And I was just wondering whether the phasing of the internalization is also the reason why you give us such a wide range in terms of fee growth in the Investing for this year, 20%, 25%, apart from market dislocation that could of course affect margin.

The second question is a bit beyond 2021, on the Banking fees, because you have a number of initiatives here, of course, and the Banking fees have been another driver for growth for fees over the last couple of years. So I just wonder how this EUR 45 million it can basically level up next year, given that you mentioned quite a growth also in the guidance.

The other question is on dividends. I mean of course the more you deleverage the balance sheet, the more your leverage ratio will benefit from this process. But the dividend that you paid as of today, the one that you basically targeted for October, fixes the leverage at 4, but you have more flexibility. So I know that you don't want to mention the payout because, I mean, your story is so dynamic and all the moving parts, basically, they influence the final outcome. But I just wonder, at the end of 2021, given that you [ add ] 50 basis points of flexibility on the leverage, you might be a little bit more courageous in terms of dividend. And what could be the base we should consider for 2021: the last one announced in 2019, which was EUR 0.32, if I remember?

And then a final question, on the Ecobonus. The tax rate that you will take is around EUR 1.52 billion, if my understanding is correct. Can you give us a little bit of color on how this benefits the NII? What is the [ heat ] attached to this? Also because, I mean, the more NII, in theory, you generate from [ landing tax rate ], I assume that the tax rate will remain on your balance sheet, of course, because you need to defend the NII, but the more you get in terms of NII, the less you need to sell bonds. And of course, it's all again very dynamic for your story. And how much was the contribution also in Q2?

[Alessandro Foti, executive]

Regarding the management fee margins, you are completely right. So the faster is going to be our execution, the better risk, by definition, because this is going to accelerate the jump in margins. Clearly, we expect that in 2021, because we are just -- we are now working right now on the new initiatives for taking a more direct control of the value chain. So we cannot rule out that some, the beginning of some possible effect can emerge and be materialized also before the year-end. But again, we prefer to be extremely cautious because if this is going to happen, it's going to be very welcomed.

So our approach. Well, our approach is that we think that to have progressively the most part of initiatives going up and running through 2022. So 2022 is going to experience an absolutely very interesting jump in the Investing revenues but with then a big -- it's going to be, let me say, a little bit kind of a geometrical progression. Because for example, in 2023, it's going to be really big and going forward. It's just that -- the reason why we are not giving an exactly precise indication of the timing is because we have initiatives that on which we have to rely, for example, on the approval by the local central bank. So we are extremely confident because we are working in a country that is incredibly efficient and cooperative with what we are doing, but clearly, we prefer to remain, again, cautious, not giving an indication on an evolution that we are not in the position to completely manage.

And so our idea is to exactly the same we did immediately after the announcement of the discontinuity, is progressively to give to the market more precise indications. So probably going through the third quarter results we are going to have in our hands even more precise indications regarding also the time horizon of the new initiatives. And our idea is to progressively become more and more precise in guiding the market also on the distribution time of the increase of these margins.

But the same approach we have used on progressively guiding the market higher on the revenues growth on Investing. Because we started on a guidance on 15% growth, and now we are in a range between 20% and 25%. So the more we progress, then the more we are going to become precise on giving an indication also on the timing.

Banking fees, going forward.

[Domenico Santoro, analyst]

Sorry. Can I stop you a minute? Can I just basically ask a follow-up question to clear, I mean, the air on this and we have everything clear? Is this phasing influencing in a way your guidance for this year, first of all? So the 20%, 25%?

[Alessandro Foti, executive]

No.

[Domenico Santoro, analyst]

No. And the other question is, in 2024, how much of the assets you imagine are going to be, as far as the production is concerned, internalized by FAM, more or less?

[Alessandro Foti, executive]

Lorena, may you give me any help on this? Because I have not in front of me the precise calculations.

[Lorena Pelliciari, executive]

Thank you, Alessandro. So in our estimation, we are working on from 45% to 50%, in a range between 45% to 50%, of penetration of Fineco Asset Management on assets under management, on total assets under management.

[Alessandro Foti, executive]

On the Banking fees, going forward, for example, what is a developing story because we are taken a little bit by surprise by the very strong growth we are experiencing in terms of client acquisitions and inflows. Because what we were expecting, considering the introduction of the new pricing on our Banking services, the introduction of the close that is giving us the right of closing the accounts of clients with too much and too high level a level of liquidity, we were expecting an increase in the quality of clients but, to some extent, a kind of deceleration on the client acquisition. But it's happening exactly the opposite. And so clearly, the more clients we are taking on board, then the more, clearly, it's boding well for the evolution of the banking fees.

And the reason why we are not giving -- we are just giving an indication of growing Banking fees is because it's a developing story. So the resilience of our growth of base of clients is taking us better price. So probably the tailwind represented by the structural disruption in the relationship between traditional banks and clients, clearly, the tailwinds is stronger than we were expecting. And so this is the reason why we are not -- we think that it's not the case to give any precise guidance on the Banking fees that are expected to keep on going up, in any case.

On dividend, you're completely right. The more we are stabilizing the growth of the base of deposits, then the more flexibility we have, because we are not just increasing there. We are not just expecting to increase the profitability of the bank; we are expecting to have larger room of disposing of this profitability.

And the reason why we are not entering in the game of giving a precise indication on the amount of dividends and on the payout is because Fineco remains a growth story. And so we want to be -- we're guiding the market in the direction that on which we feel absolutely confident that our dividend per share is expected to keep on growing. But at the same time, we want to maintain the flexibility to capture all the opportunity for making our growth even more robust. So in this case, I'm referring to the expansion abroad. Clearly, the more we are going to see the favorable conditions, then the more we are going to take advantage of this.

And so for this reason, we think that to enter in an approach that is reached with a low level of flexibility on dividends doesn't make a lot of sense for a growth story like we are. So we think that we are a unique combination of a fast-growing company that, at the same time, is extremely relaxed on continuously increasing the dividend. But we want to remain, we want to maintain the flexibility to get all the opportunity offered in terms of growth by this extremely fast-changing world.

And on the tax credit, again I'm asking to Lorena to give a more precise indication on them, which is the kind of yield we are expecting to get on the tax credit. I want to remind that the tax credits are not weighting on the balance sheet because they are completely -- they are not generating risk-weighted assets.

But Lorena, if you can elaborate on the yield?

[Lorena Pelliciari, executive]

Yes. So we expect a yield in the region of 1.4%, 1.5%. It depends on the mix of the tax credit we are buying because there are tax credits with a duration of 5 years or 10 years. We buy from retail customers, but we are buying also on the secondary market by institutional counterparties. And we expect yields that is very interesting yields for us.

[Alessandro Foti, executive]

I would like to reiterate the concept that Fineco is in a unique position because we have a combination of growing and predictable profitability. So this is allowing us to be quite confident when we are buying tax credits. This is not the same story, [ for instance, ] for traditional banks. For them, the profitability is less predictable, because we know that, for example, if tomorrow morning there is another recession, clearly, we hope that this is not going to happen, clearly, for traditional banks, this is going to have a huge impact on their profitability. This is not our case.

So our profitability is predictable, continuously growing. And also, we have this extremely favorable situation represented that we are acting as a withholding agent for our Brokerage clients, and this is giving to us an even larger room for buying credits by clients.

And finally, Fineco is incredibly efficient from an operational point of view, because this is a business incredibly complex from the operational point of view. And this is the reason why many organizations, they are giving up on buying tax credits.

[Domenico Santoro, analyst]

Sorry. This EUR 1.5 billion is a stock that can be generated reasonably soon, before the end of the year? Or it's more a target of 1 year, 1.5 years?

[Alessandro Foti, executive]

As usual, we prefer to be very serious, avoiding to sell bucket dreams. Lorena, correct me if I'm wrong, our goal is to fulfill the full capacity going through 2021 and going through 2022. Probably by the end of 2022, we expect to be at the full capacity.

[Lorena Pelliciari, executive]

Yes.

[Operator]

The next question is from Angeliki Bairaktari with Autonomous Research.

[Angeliki Bairaktari, analyst]

First of all, could part of the margin uplift that you're guiding as an outcome of the actions that you're taking at Fineco Asset Management get competed away over time, meaning that you benefit from around 12 basis points uplift by 2024, but maybe the underlying trend of the industry competition effectively means that you have to lower margins across the FAM products? I would like to get your thoughts on that.

A second question. Are the financial advisers remunerated more for the FAM products relative to third-party products?

And a third question, on the Germany launch. Will this be with online brokerage first? And is it fair to consider that you will offer very competitive prices relative to the Italian market, given competition in Germany is much higher?

[Alessandro Foti, executive]

Yes, the margin uplift is mostly driven by operational efficiency. And so this means that we are in the position to be able to give to our clients. So it's the perfect combination which we are able to give to our clients on the new products and a higher level of convenience because we are recovering in a big way efficiency; at the same time, increasing our margins.

For this reason, we think that this guidance is not under the threat of increasing competition by the market on the [ pressure on ] margin. I would like to remind that, overall, generally speaking, Fineco remains among the decently large players in the asset-gathering industry the most competitive. So we're going to be, for sure, the last ones in suffering any potential pressure on margins.

In any case, we have also interesting projects also for -- we started also internalizing also, for example, passive funds that is a way of giving to our clients an extremely convenient product but, at the same time, retaining internally in a quite interesting level of profitability. And we cannot rule out, going forward, to extend our internalization, for example, to the ETFs, where that is an extreme [ enough pain ]. So we know we -- that guidance has been given to the market, considering also the expected pressure that is going to build up on margins on the industry.

Regarding the financial planners remuneration, the answer is, yes, the financial planners are getting more on Fineco Asset Management products, but this is mostly driven by the fact that on our Fineco Asset Management solutions we are able to have a much more effective and efficient, for example, risk management process in place. Because on the Fineco Asset Management products, we have the possibility to have the look-through of the composition of the funds in real time. And when we are looking to the original retail strategies on the platform, they look through, in the best cases available, with a temporary lag between 30 up to 60 days.

So clearly, the reason -- I was referring that is a perfect combination which the clients are getting more convenience, then surprising on the new generation of products; the bank is increasing the margins; and the financial planners are paid more.

And on Germany, the answer is, yes, we're going to offer an extremely competitive pricing. And if you look to what the pricing we have in U.K., you have, in my opinion, a good proxy of the kind of offer we are going to bring in Germany.

I would like also to remind that in Germany the conditions of the market are a little bit less convenient than our peers. And so we think that with the pricing we have in mind, that is not a secret, again if you look to the pricing we are using in U.K., this kind of pricing is going to be extremely competitive and disruptive on the German market.

I don't know, Paolo, if you want to give some more flavor on this point?

[Paolo Grazia, executive]

Yes. Maybe that we are planning to start in Germany with the full range of products we offer in Italy, meaning also Investing since the beginning. So we will be offering Brokerage, the full offer; Investing, the full offer, with more than 60 asset managers; and of course, the Banking also.

And then, yes, the pricing. We know very well it's very important, but it's not the only thing. I think probably our strength is to put together pricing with a range of products, the one-stop solution, and of course the reliability of the platform and, most of all, the customer care we offer, which is a very high level.

[Angeliki Bairaktari, analyst]

Just to confirm, there will not be a physical financial advisory in Germany, right? There is not going to be a network of financial advisors.

[Paolo Grazia, executive]

No, just digital. No financial advisers.

[Operator]

The next question is from Luigi De Bellis with Equita.

[Luigi De Bellis, analyst]

Three questions for me. The first one is on the U.K. and Germany initiatives. Can you elaborate a little more on the strategy for your growth abroad, in particular in Germany? For example, I know it's too early, but some targets, initial targets in terms of customer acquisition, mix of sales or target of assets under management or timing of the expected breakeven in Germany based on U.K. experience.

The second question is on the distribution of third-parties savings accounts. What is the expected contribution from this initiative?

And the last question is more general on the M&A and the evolution of asset management industry in Italy and if you expect, in particular, a change in the competitive scenario, going forward, also in light of the recent interest for Deutsche Bank financial adviser network or statements of foreign players to enter or strengthening their presence in Italy.

[Alessandro Foti, executive]

Regarding the first point, I think, Paolo, that probably you agree that on Germany it's clearly too early to start on giving such a precise indication, because we are studying the -- we are preparing the plan for entering Germany, but not to give any precise indication on -- we are going to use the same approach we have used in U.K. So extremely relaxed. We are going to leverage on our huge operational leverage so we're not under pressure. But at the moment, we think that it's a little...

For sure, also the same case of U.K., the operational breakeven is going to be reached relatively in an easy way, thanks to the operational efficiency we have.

I don't know, Paolo, if you want to elaborate a little bit more on the point?

[Paolo Grazia, executive]

Yes. For Germany, it's too early. We have a precise plan in our head, but it's too early to talk about it, I think. And yes, great operating leverage. Probably within 1 year we will be able to cover it, the cost, the structural cost. And again, it will be a mix anyway of our main strengths. As we said before, pricing is reduced, customer care, range of products, the solidity and reliability of the platform, all these things. I think there could be very, very strong in every country of Europe, actually, not only in Germany and in U.K.

[Alessandro Foti, executive]

And we're using the usual approach. The more positive feedback we're going to receive from the market, then the more money we're going to put on the table. And what we can, an incremental approach.

On distribution of third-party savings accounts, as we said, we are now in the face of the family-and-friends phase. We expect to open the platform probably by the end of the month. I don't know, Paolo, if we can confirm that probably it's going to be at the end of the month?

[Paolo Grazia, executive]

Yes, we're going to open, yes, by the -- in a week or 10 days, we're going to be open. Yes, I confirm.

[Alessandro Foti, executive]

And the contribution we expect and we are quite confident to have an absolutely interesting contribution in our journey for deleveraging the balance sheet. Because practically, we are going to accelerate the absorption of liquidity by the most reluctant clients in buying assets under management solutions. So this, clearly, we are going to start initially with the first bank, and progressively we're going to add some more banks, going forward.

And on the competitive scenario, we have not such a great interest in what's going on, because we can confirm that we are not interested in any external option for growing because our organic growth is so strong, so peak, that clearly, practically every year we are -- it's like to acquiring a middle-sized network of a middle-sized banking network. And so really we have absolutely no interest in what's going on at the moment on the market. We prefer to remain fully concentrated in making our organic growth gaining momentum. And the tailwinds are incredibly strong and keeping on reinforcing that, clearly, we think that it would be a massive mistake to waste time for chasing external opportunities.

[Operator]

The next question is from Andrea Vercellone, with Exane.

[Andrea Vercellone, analyst]

I still have quite a few. Hopefully, they're quick. The first one is on your guidance on tax rate, going forward. I understand the logic as to why it drops. I was just wondering whether your guidance is for 1 percentage point dropped every single year until 2024, or a shorter period.

Then on launch in Germany, can you give us an idea of the onetime costs that you plan for next year in terms of setup, marketing expenses, recruiting? Actually, there's no recruiting because it's completely online. Just to know, similar to what you did for the U.K., how much we should expect in terms of launch costs.

Then on capital, I was just wondering if the EUR 250 million RWAs that you flagged in Q1 related to Brexit are still there in H2 and what dividend accrual assumptions you have made for the first half of the year. I understand you will pay whatever you will say. I just want to know what is in the capital calculation.

Then on bond disposals, I would like to know if there's any accounting or practical limitation as to how many you can sell every year. I believe it's 10% of the total, but I'm not sure. In the sense that if your deleveraging is very successful, well, in theory, you could sell a lot of bonds in the early years. I just want to know if there are limitations to doing so. Then you may choose to do it or you may choose not to do it.

Then on dividends, going forward, it wasn't clear to me, the question has already been asked but the answer wasn't clear to me. You mentioned progressive dividend policy. What wasn't clear to me is from what base, progressive.

And finally, on FAM, again I understand the logic as to why margins expand, gross margin expand. You have also mentioned that financial advisers are paid more for distributing FAM-managed products as opposed to third-party managed products. Is it then fair to assume that the, well, line item, I don't remember how you call it, but compensation to financial advisers is also going to increase geometrically as FAM's margin will do?

[Alessandro Foti, executive]

So let me start from the -- so I'm asking my colleagues if they can scroll so I can see this. Regarding the tax rate going forward, clearly, I'm asking to Lorena to confirm that I'm not wrong that the drop is 1% per year, up to 2024, I suppose, Lorena?

[Lorena Pelliciari, executive]

Yes, it's correct. It's correct. It's correct.

[Alessandro Foti, executive]

So regarding the one-off cost for Germany setup, for sure, they're going to be lower than the U.K., because the process is going to be more straightforward considering the more direct passporting, considering that Germany is part of the European Union and so on. But Paolo, if you want to give, to be even more precise of estimating potentially the one-off cost for Germany?

[Paolo Grazia, executive]

Yes. It's going to be, for sure, less than what we spent in the U.K. It's going to be in the region of less than EUR 1 million, probably. And yes, this is pretty much the amount.

[Andrea Vercellone, analyst]

But in terms of advertising budget? Because, obviously, you set it up, but then you need to make yourselves known. That could be several millions, I suppose.

[Alessandro Foti, executive]

Yes, but it's too early to say because it depends on -- because we prefer to have a precise idea of the market. Because when you present in U.K., when we started initially, we had been very prudent in starting on spending money, because before spending aggressively on marketing you have to make sure that what you are presenting is absolutely perfectly fitting to the market conditions.

And clearly, we think that what we are setting up is quite good for the German market. But until you are not there, you cannot be completely sure that all the small single details are perfectly working. So we prefer to be extremely flexible on this point. Because if everything is absolutely perfect and perfectly working, the market can -- also because, but on this point probably Paolo can be even more precise, considering that in Germany at the beginning, the largest part of the business, the beginning is going to be represented by Brokerage. And so Brokerage depends also on the market conditions. So Paolo, on the point that there is volatility in the market. It's worth the case to spend in marketing. But if the volatility is not there, like, for example, in this period of time, it doesn't make a lot of sense to spend money. I don't know, Paolo, if you want to on the point?

[Paolo Grazia, executive]

Yes, of course. First of all, we're going to spend the first 6, 8 months of 2022 to fine-tune the engine, because before spending a large amount of money we need to be sure 100% that the engine is working properly. And then we will start spending a few money to test the process, basically. So we see the full steam at the end of 2022 and 100% full steam in 2023.

[Alessandro Foti, executive]

So reasonably speaking, next year in Germany and unless we found in an incredibly favorable condition in which everything is perfectly working and also the market is incredibly favorable for Brokerage, with volatility spiking up again, and so on, I'm not imagining that we're going to spend in a big way marketing in Germany. It's going to be much more in a setup period of the business. I don't know, Paolo, if you share my view?

[Paolo Grazia, executive]

100%, yes.

[Alessandro Foti, executive]

On the capital, I don't know, Lorena, if you want to give -- there is the question on risk-weighted assets and the dividend accrual, if you want to give a more precise answer?

[Lorena Pelliciari, executive]

Okay. Thank you. So regarding the risk-weighted assets related to Brexit, we have started to progressively decrease our exposure towards U.K. And in the second quarter, we have reduced the U.K. exposure by EUR 71 million in terms of risk-weighted assets.

And regarding dividend...

[Alessandro Foti, executive]

Lorena, going forward, which kind of guidance we can give on this point?

[Lorena Pelliciari, executive]

Our expectation is -- not our expectation. Our proposal is to reduce completely the exposure towards U.K., if the U.K. counterparties will not be considered as equivalent European country. So with a zero risk exposure.

[Alessandro Foti, executive]

Exactly. Because the plan, we are moving progressively because, clearly, [ the disposition ] is completely unreasonable because to charge 100% risk-weighted assets on a U.K. exposure doesn't make any sense considering that we have other countries that are not part of the European Union that don't have the same penalized treatment. So we think that -- but in any case, the plan is if this is not going to happen, the plan is progressively to get rid completely of the U.K. exposure.

And on the dividend?

[Lorena Pelliciari, executive]

Regarding the dividend, in the first half we had accrued in Common Equity Tier 1 capital EUR 87 million of net profit, of which EUR 32 million related to the impact of fiscal realignment of goodwill. This represented 70% of payout ratio, excluding from the net profit the positive impact of fiscal realignment of goodwill.

[Alessandro Foti, executive]

And regarding the bond disposal?

[Lorena Pelliciari, executive]

Regarding the bond disposal, yes, we have a limit that is 10% of the total amount of bonds that we have at the end of the previous year.

[Alessandro Foti, executive]

Yes. But regarding the point raised by Andrea, that in the case that we have a faster-than-expected deleveraging process, we can sell more, clearly.

[Lorena Pelliciari, executive]

Yes, yes. Absolutely.

[Alessandro Foti, executive]

[indiscernible]

[Lorena Pelliciari, executive]

We have a so big amount of bonds that it's quite impossible to have.

[Alessandro Foti, executive]

And regarding the dividend, the dividends going forward, progressive dividends policy, from what base, progressive. Lorena, it's still yours this.

[Lorena Pelliciari, executive]

Alessandro, you have already answered to this question without giving a precise guidance on that.

[Alessandro Foti, executive]

So the point here remains the same. So I want to be sure that we got your questions in the right way. We are quite absolutely confident on being able to -- to keep on growing our dividend per share. And this takes the combination of continuously growing profitability and larger [ room ] on disposing of this profitability. But we prefer not giving a precise indication on the payout exactly because Fineco is a growth story. So for this reason.

But the question was from what base we are seeing...

[Andrea Vercellone, analyst]

Yes, the question was not on payout, which obviously depends on the earnings. It's more, if you say growing, the only references we have got is the special dividend you will pay in Q4, which however relates to 2 years, or the dividend you paid in 2018. We have no other reference points. So then if it's, I don't know, below 2018, we will be telling you, you said it was going to be growing, and it didn't. I don't know if it will or will not, but just to be somewhere guided in the correct direction, let's say.

[Alessandro Foti, executive]

So let me -- I understand that Lorena will...

[Lorena Pelliciari, executive]

So our objective is to -- so our constraints is the leverage ratio. And our goal is to maintain a leverage ratio above 3.5%, from 3.5% to 4%. The excess of capital in relation to this ratio can be distributed as dividend. And around 70% of dividend payout is a number that could have a sense for us.

[Andrea Vercellone, analyst]

Okay. And on commissions to, retrocessions to financial advisers?

[Alessandro Foti, executive]

The margins that we are giving as sort of 75 basis points pretax and, what was it, 50? What was the...

[Lorena Pelliciari, executive]

55.

[Alessandro Foti, executive]

55. Clearly, they are considering -- so correct me if I'm wrong, Lorena, they are considering what is paid to financial planners.

[Lorena Pelliciari, executive]

Yes. It includes all [indiscernible].

[Alessandro Foti, executive]

So these margins are embedding automatically the higher payments that we're going to make to financial planners for the increase of the penetration of Fineco Asset Management. So these margins, from that point of view, are net margins, not gross margins.

[Operator]

[Operator Instructions] Gentlemen, there are no more questions registered at this time. Mr. Foti, would you like to add any final comments to conclude the conference?

[Alessandro Foti, executive]

Thank you very much for attending our conference. Thank you once again for the extremely precise and extremely important questions you made to us. And as usual, if you need to make some more deep-diving in our numbers and concepts, please feel free to make us a call for arranging a follow-up. Thank you again.

[Operator]

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