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Welcome, and thank you for joining the FinecoBank Second Quarter 2022 Results Conference Call. [Operator Instructions].
At this time, I would like to turn the conference over to Mr. Alessandro Foti, CEO and General Manager of FinecoBank. Please go ahead, sir.
Good afternoon, everyone, and thank you for joining our Second Quarter Results Conference Call. Before going into the details of our presentation, let me please remind you that in recent months, there has been a huge change in the structure of the market, which is further enlarging our growth opportunities as a platform. As you know, our new dimension of growth is underpinned by the recent acceleration of the structural trends that are reshaping the society. This has been further strengthened by the increase in the interest rate scenario since the beginning of the year. The main outcome is that Fineco is becoming more and more a fast-growing and capital-light business model with a structurally higher profitability and a structurally higher room to dispose of it as the leverage ratio is no more a point of attention. This will allow us to distribute a higher level of dividend at the same time to be in the position to invest more to our growth.
Let's now move on Slide 5. So adjusted revenues at EUR 464 million, increasing by 15% year-on-year and mainly supported by the investing thanks to the volume effect and the higher control of the value chain by Fineco Asset Management, 5% year-on-year on a like-for-like basis despite the very challenging macro scenario. The quarterly decrease is entirely explained by the contribution of profits from treasury management at the beginning of the year. Revenues at EUR 464.3 million, up by 15.1% 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 and to the robustness of our net financial income. Operating costs at EUR 136 million, well under control and increasing by 3% year-on-year, excluding cost strictly related to the growth of the business.
Let's now move on Slide 7 and start to analyze more in details the dynamics of our results. Net financial income in the first half of the year at EUR 176.4 million, increasing by more than 19% year-on-year with net interest income at EUR 127 million and profit from treasury management at EUR 49.4 million. Let me highlight that the net interest income is increasing again, starting from this quarter, thanks to the strong gearing to interest rates, we are driven by how quite valuable and sticky transactional liquidity. We are continuing to accelerate the growth of our nonfinancial income, which in the first half reached EUR 287.4 million, up by 12.7% year-on-year, mainly thanks to the positive contribution of investing and banking.
Now jumping on Slide 22. We will deep dive on the performance of the brokerage business. Overall, brokerage registered an excellent first half at EUR 107.1 million, despite the negative market context in terms of volumes, confirming a structurally higher flow compared to the pre-pandemic levels regardless of the level of volatility in volumes. As you can see in the chart on the top of the slide, in the second quarter of the year, brokerage revenues reached EUR 47.3 million, resulting in a monthly average 40% higher compared to the monthly average revenues in the period 2017-2019.
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 on which we will deep dive later in the presentation; second, the widening of our client base using the platform as shown in the graph on the bottom of the slide, where you can see that the investors have grown significantly in absolute terms standing around 35% above the average level of 2018/19. This trend has been confirmed also in the most recent quarters despite the low volumes on the market. Hence, our target market is focused on wealthy and financially aware clients able to trade in every market conditions. Third, we are continuously increasing our retail market share.
Let's now move on Slide 9 for a focus on investing. Fineco is positioned in the sweet spot to capture the structural trends in place in Italy, and also thanks to our initiatives, we have experienced the strong acceleration towards asset under management. On top of this, Fineco Asset Management is now reaching a new dimension in the economies of scale, this taking more control of the value chain. As a result, investing revenues were equal to EUR 141.1 million in the first half of 2022, increasing by 22% year-on-year, with management fees increasing by 22.6% year-on-year.
Let me highlight that the strong contribution by Fineco Asset Management has been able to sustain our margins and revenues in the quarter, characterized by strong negative market performance with average stock decreasing from EUR 53.6 billion in the first quarter to EUR 52.2 billion in the second quarter. Investing revenues in the second quarter increased by 3.1% quarter-on-quarter with just a modest quarterly decline on management fees by 1.5% due to the negative market performance. And management fees margins after tax, flat quarter-on-quarter at around 52 basis points.
Let's now move on Slide 10 for a focus on our cost. This slide confirms once again efficiency to be part of our DNA and core in our bank, representing a clear and unique competitive advantage. Also this quarter was characterized by cost directly related to the strong acceleration of our growth dynamics in the new normal world. Operating cost in the first half of the year at EUR 136 million, growing by 3% year-on-year, excluding costs related to the growth of the business, mainly additional EUR 4.2 million cost for Fineco Asset Management that are current with acceleration to further expand its business and have a higher control of the value chain, additional EUR 1.5 million in marketing costs. Staff expenses at EUR 57.5 million in the period, increasing by 4.8% on a yearly basis, net of costs related to the expansion of the business of Fineco Asset Management. Finally, non-HR cost at EUR 78.5 million, growing by 1.8% year-on-year, net of the above mentioned costs related to the growth of the business.
Let's now move on Slide 12 for a focus on our capital ratios. Fineco confirmed once again a rock solid capital position on the wave of a safe balance sheet. Common equity Tier 1 ratio at 19.14%; leverage ratio at 3.82%, risk-weighted assets at EUR 4,851 million, and total capital ratio at 29.45% as of June 2022.
Let's now move on Slide 19. As anticipated at the beginning of the call, we are in the sweet spot to benefit from the new market structure that we had that despite the current volatile environment, the growth of revenues expected for 2022 is stable compared to the last quarter presentation with a different mix, thanks to the quality of our diversified business model. With regards to our banking revenues, we expect our net financial income in 2022 to be around EUR 330 million with the current forward rate curve. In 2023, we expect the growth of the net financial income in a range between plus 30%, 35% compared to the upward revised 2022 expectations and already cautiously considering early repayments of the TLTRO at the end of 2022.
Going forward, we expect our net interest income to keep on benefiting from the new interest rate environment, both thanks to the sensitivity and to the volume increase. Overall banking fees are expected above EUR 50 million in 2022. In 2023, we are expected to keep on growing, thanks to the increase of client base and to the previous repricing actions. On investing, taking into consideration the negative market effect up to June, we expect that for 2022 revenues to increase by around 10%, with higher management fees margins year-on-year. Overall, bank's asset under management net sales are expected at around EUR 4 billion. For Fineco Asset Management, we expect the retail net sales in a range between EUR 3.0-3.5 billion and an increase of the funds underlying component that will offset the decrease of our retail net sales versus the previous guidance. We also expect it to increase by around 110-130 personal financial advisers in our network.
Going forward, we can see in the guidance of around EUR 6 billion net sales a [ year ] in the overall bank's assets under management. For our Irish company, we expect retail net sales around EUR 5 billion per year. And also here, we expect an increase of the fund's underlying component that will offset the decrease of our retail net sales versus the previous guidance. Finally, we confirm the increase of the bank's management fees margins after tax up to around 55 basis points and pretax margins up to around 75 basis points by 2024. Let me please underline that thanks to our increasing expectations in the fund's underlying net sales component in our Irish company, we expect to reach our management fee margin target before 2024.
Brokerage revenues are expected to remain strong with a floor in related terms, with respect to volatility that is definitely higher than in the pre-COVID period. Let me remind that the trend has been further confirmed in the first half of 2022, despite the worsening market conditions in terms of volumes. Operating costs in 2022 are expected to grow around 5% year-on-year, not including around EUR 7 million in additional cost related to Fineco Asset Management strategic discontinuity to improve the efficiency of the investing value chain. On cost, let me please underline that strategic decision to manage 100% internally our IT is protecting us from the inflation on IT cost. Thanks to this, we will consider in the coming months, the visibility to further accelerate the market expenses to take advantage by the strengthening of the structural trends. Let me please add that we expect Fineco Asset Management cost to stabilize going forward.
Cost income, we confirm our guidance on a continuously declining cost income in the long run, thanks to the scalability of our platform and to the strong operating gearing we have, these excluding potential higher marketing expenses. Systemic charges for 2022 are expected in a range between EUR 45/47 million booked within the provisions for risk and charges based on the increase of protected deposits within the banking system. Tax rate for 2022, we expect a decrease around 0.5 percentage point, considering the most recent interest rate scenario and therefore, according to the revenue mix. On our capital ratio, we expect the Core Tier 1 ratio to remain comfortably above the floor of 17% and the leverage ratio comfortably as well in the range between 3.5-4%, currently with the combination of both a strong acceleration in the growth on the bank and the distribution of generous dividends, as you can see Slide 51, the annex of our presentation, the point of attention related to the leverage ratio has been definitely fixed.
On dividend per share going forward, expect it constantly increasing, also thanks to the progressive delivery on our strategic discontinuities. Cost of risk was equal to 2 basis points, thanks to the quality of our lending portfolio that is hopefully exclusively to our loyal customer base. In 2022, we expect to stay comfortably below 10 basis points. Finally, we expect a robust and high-quality net sales with a mix mainly skewed towards asset under management and with a lower component of deposits, thanks to all the new initiatives we are undertaking.
Let's now move to Slide 21. As anticipated during the presentation, Fineco Asset Management is progressively delivering in its strategic discontinuity to take more control on the investing value chain, resulting in higher revenues and margins for the group. The contribution of Fineco Asset Management to the group asset under management net sales is further improving regardless the macro scenario, moving from 57% in the first half of 2021 to 81% in the same period of 2022. In the first 6 months of the year, our Irish company recorded EUR 11.4 billion of net sales in retail classes, in a market environment much more complex compared to the same period of 2021.
Fineco Asset Management continued to deliver in the internalization of the value chain with a strong increase in net sales of funds underlying of wrappers. As a reminder, this process is linked to the substitution of Fineco Asset Management funds within the building blocks used for funds of funds or insurance swappers, this leading to an additional margin contribution for the bank.
To conclude, let me highlight that thanks to the full control of the value chain, our Irish company can go further at the same time, both an efficient pricing for clients and retaining higher margins.
I now leave the floor to Paolo Grazia, our Deputy General Manager, for an update on the new initiatives that the bank is undertaking on Slide 23. Please, Paolo.
Thank you, Alessandro, and good afternoon, everybody. In this slide, let me introduce the wide range of improvements we are undertaking throughout the whole one-stop solution to further simplify our already best-in-class user experience, thanks to new easy-to-use tools and more efficient marketing engine. This new platform will be the cornerstone of our international offer. On brokerage, we are introducing several initiatives to speed up the activation rates and to improve the client segmentation and cross-selling.
In 2023, we will introduce a modular approach to further catch our next generation of active investors with the launch of a new brokerage-only account with the possibility to upgrade to our full-fledged platform anytime. This will be characterized by dedicated pricing, a faster onboarding process and the redesigned front end for an easier journey towards trading ideas and will allow us to better segment our client base and target clients all interested in brokerage. The new offer will be particularly appreciated by and clients and will also favor small ticket trades. On top of this, we will introduce the new trading page to let our clients access in an easier way to trading opportunities. And finally, the new brokerage platform will soon be in the family and friends space and its launch is expected by the third quarter.
On the investing area, we have simplified our own page to better market investment solutions, fitting to the best for each cluster of clients. On the operational side, we have further improved the user experience of our process to allow clients to interact digitally with our financial advisers. On top of this, we are preparing a new advisory platform, allowing for an even more tailored service for our clients in terms of pricing, reporting and risk management.
On banking, we have recently improved our onboarding service through an easier and faster process which was inspired by our experience in the U.K. In the very first weeks since the launch, has resulted in an increase of 30% of current accounts opened throughout our mobile application. On top of these activities, we are going through a strong improvement of our marketing engine in order to further exploit our big data analytics. The results of the first tests are very satisfying as we are recording a far lower acquisition cost and better conversion rate.
Let's now jump to the Slide 25 for a focus on the international business. In this slide, we're presenting the strategy for the development of our business abroad where we will leverage on simplified and digital-only offer. We are now getting ready to the development of our brand-new platform for investments that we have developed internally, which will be highly scalable and multilanguage. This will allow us for a smoother and more straight forward startup process for entering new countries as it will only imply a business and marketing effort to identify the right set of products and services.
Moving on to the update on our U.K. business. Let me first highlight, we are on talks with the local authorities on the post-Brexit set up, and we are evaluating the pros and cons. For this reason, we have reduced our marketing activity over the last few months. Despite this, our business is gaining traction, thanks to the word of mouth, and we are improving our revenue generation as we have already anticipated, the new country we are planning to approach is Germany in 2023, leveraging on our new platform for investment. Our plans are to develop the offering in 2 steps: first, brokerage and multicurrency and second, investing with no network of financial adviser. The offer will tailor German customer behaviors, leveraging on CFDs, certificates and DTS, while the brand positioning will look to acquire sticky, high-value and financially aware clients looking for fairly priced quality service as in our DNA.
Finally, in the next few years, we plan to approach different countries across Europe depending on the opportunity that may arise.
Thank you for your attention. And I will hand it back to Alessandro, please.
Thank you, Paolo. Before moving to the Q&A session, let me please add that today, the Board of Directors approved the 2050 net-zero emissions plan regarding both operational and financed emissions, also defining intermediate targets by 2030. Thank you for your time, and we can now open the call to questions.
[Operator Instructions]. The first question is from Enrico Bolzoni of JPMorgan.
A few questions from my end. So actually starting from one of the last things you mentioned, which is this innovation and simplification project. So within brokerage, it seems that you want to step in a bit more into the, as you say, lower ticket, younger generation, younger demographics. Can you give us an idea in terms of what do you think is the addressable market in Italy? And if you can also give us any color in terms of what pricing are you thinking of? And again, related to that, you soon will be going to Germany. Is there an opportunity there to actually export this new platform for younger demographics. So for example, I'm thinking of [indiscernible], which might end up being a bit more of a direct competitor there. So that's the first question.
My second question was related to the fee margin. So the management fee margins were actually flat over the quarter despite the AUM came down, and I presume, especially equities came down quite a lot. So that clearly was impacted positively by the transformation of FAM. Can you give us an idea and quantify how much margins could have been if, let's say, equity markets would have remained flat over the last quarter. That would be helpful.
And then finally, I would have -- yes, final question. NII is going up. Are you still of the idea of not paying deposit holders at the current stage? And what should we expect over the next couple of years if rates continue to go up?
Let me start by the innovation project. Clearly, the main rationale behind our decision is I want to be extremely frank and transparent, so in going forward, the most part of money is going to keep on being done in the clients in a range of age between 40 and 65 years old right now. And this is not expected to change anytime soon. But at the same time, it's important that you start on building the base of your client of the future. So the driver behind this move is much more in direction of keeping on building up what are going to represent our future clients and is not driven.
So the main goal, clearly, we expect also in a contribution in terms of revenues, but this is not exactly the main goal. And the pricing is going to be as Paolo was explaining, is going to be more efficient in segmenting in favor of small tickets because at the moment, Fineco is extremely convenient for the decent ticket but is less aggressive on the small tickets. So this offer is going to be even extremely efficient on the small tickets. But again, the ratio is not to take on more the unaware clients because we are going to remain stuck to the concept that other clients we're going to convert has to be a client aware of what they are doing.
Clearly, this is going to represent the backbone of what we are planning to do in Germany, for example. I don't know, Paolo, if you want to give some more color on this point.
Yes. Basically, 3 things. The first, it's an investment for the future. As Alessandro was saying, we're just investing on people that will be in the future, our private clients and people that will use the full platform. Second is going to be very helpful for the international expansion. And the third is that always when we think we designed something for younger generation, we are forced to simplify everything to think even in a simpler way. And this is something that we will use also for the rest of the offer. So this is the basics.
And of course, we are going to offer to this segment -- Actually, we already have a lot of things for one generation in our offering, but probably we have to do a better marketing to propose things like the ETF plan, all the ETF work, we just signed a zero commission agreement with different houses. And this kind of things we will market to this kind of younger generation.
On the point on the management fee margins, I agree with you that the resilience of our margins has been quite impressive. And clearly, the main reason is that we are keeping -- we are progressing in our journey of keeping much more the right control of the value chain. And so this also is the rationale behind the extreme resilience of the guidance because we are confirming the achievement of the goal we gave to the market last year. And also, we remain on track for achieving that goals before the schedule. And behind this, there is the assumption that we return to neutral market conditions so we are not embedding any positive or negative market effects. So assuming an absolutely neutral market, we can keep on -- we can reiterate the initial guidance.
And to give you the exactly which kind of margins we could achieve the case of negative market effect, probably have to ask my colleagues of the investor relations team to make a follow-up because I have not -- I'm not able to give you such a detailed and precise number right now. And so okay. So on net interest income going up, yes, we know we are not planning to pay anything to clients, but for a very simple reason because as we are repeating that the largest part of the liquidity we are gathering is represented by transactional liquidity.
So the liquidity we are collecting is, for the most part, transaction liquidity. And then there is the remaining component that is liquidity that is just waiting to be put at work in the markets. And as soon as we -- as much as we return to more stable market conditions, the process is going to keep on accelerating and this is going to move us in the direction of a business mix more skewed in direction of asset under management. But again, the remaining part of the liquidity being transactional liquidity, we are not going to pay anything to clients.
Just as a reminder, Fineco stopped on paying interest rates on deposits in 2012, so many, many years ago. And this has been a strategic decision because we are not interested in taking on board the wrong liquidity for the wrong reasons and so this is the -- thanks.
The next question is from Domenico Santoro of HSBC.
Some questions from me. First of all, on the net financial income for the second part of the year end 2023. Can you please confirm whether this number includes any profit from treasury management? Or is it confirmed what you said in the last call that from now on, you should expect basically 0 under this line. The second question is on the potential upside if TLTRO conditions remain the way they are and whether you can go up additional NII going forward. And so if you could quantify.
And then I noticed that you have increased the bond exposure in the quarter and also a little bit of the maturity [indiscernible] came down. So you are better positioned to grab the rates impact. So I was wondering whether from now on, given this P&L line is going to be bigger and bigger, you can change again a little bit remix, increase the exposure and benefit even more from the rate increase.
The second question is on investing revenues. I appreciate you gave this 10%. Is it -- I mean it's a bit probably conservative, the numbers. So I wonder whether you have included in the second part of the year, still difficult market. And the question is whether it could leave some upside going forward. Instead brokerage probably is the one that keeps a little bit disappointing and also the July number. I know that it wasn't a great month when it comes to volatility. But even when I redo the month based on the number of executed orders, it looks like the average fee is coming down still quarter-on-quarter. So I just wonder whether that's the effect of the mix, less equity or there is a little bit of competition in Italy, given new entrance.
And then I see the EUR 6 million trading profit in the Banking division on top of the profit from treasury management. I just wonder which source of revenue is that.
Yes. So let me start by the by the financial income. Yes, we confirmed that there is going to be made exclusively by net interest income. And so we don't expect any material trading profits going forward. We prefer to give the guidance on the net financial income, excluding the TLTRO because it's clear that this been introduced with the rationale behind. So I'm asking to my colleagues if they can stop on keeping on rolling the questions because otherwise I'm getting a little bit lost.
We prefer to give the guidance without including the TLTRO because this has been introduced in order to offset the negative impact produced by negative rates. Now, they say rates are disappearing and so we think that there is a very high probability that the TLTRO is going to be -- you're not going to be offered in the same very favorable conditions. But in any case, the case is going to say, I'm asking to -- Lorena, you have that number available immediately?
Yes. Thank you, Alessandro. For 2023, in the case of -- we have the TLTRO in place, we can have EUR 15 million of additional margins, considering the current environment. But, we don't know exactly what will be the condition for TLTRO, this is why we have executed in our calculation.
Yes. So regarding the third question, I'm not sure that I got correctly your questions because you are referring to increased bond exposure in the second quarter. The increase of the bond exposure is related to the increase of the liquidity we are gathering. So going forward, we don't expect any significant discontinuity in respect to what has been done until now. We expect it to remain, to maintain an average maturity in a little bit above 5 years. And so we don't expect to make any significant change. And the most part of the investments are going to be driven in the direction of the so-called Eurobonds and so on. So this more or less is what you can expect. And this is exactly embedded in the guidance we are giving to the market, particularly when we are referring to the increase between 30-35% of the financial income going through 2023.
On question 4, the investing guidance for 2022 is yes, probably you are right because, for example, we are not considering we stopped -- we didn't consider the positive market effect of the month of July that has been the best month of the year. But, as usual, we think that is -- you have to be extremely careful in considering the market effect because the market is volatile. But, yes, there is -- if we are -- these numbers are confirmed, again, is probably is a little bit conservative.
July broke -- I don't agree that on the disappointed from July brokerage because clearly, we -- July has been characterized by market conditions in terms of particularly volumes that has been really, really bad, but not just for online brokers, but for overall the market. So the volumes are very close to the historical lows. And nevertheless, the numbers has been strongly higher than the pre-pandemic events. And so we think that usually, when we are trying to evaluate the floor of the business, we are looking to the forward months. And July has been an extremely unfavorable month for brokerage. Nevertheless, we have been able to deliver absolutely resilient results. And for this reason, this is the reason why we are not considering July brokerage as a disappointing one.
And 3, we don't have any -- absolutely, we don't have any pressure on margins. And probably, I don't know, if there is the average fee is coming down, there is probably some technical reasons in terms of mix of products and some, but probably if you don't mind, we can return to you later on being a little bit more precise unless Paolo has got something ready to explain this part of your question. I don't know, Paolo, but...
Yes, it's also depending on the part of the flow we internalize. And so it depends on the -- each month is different because the mix of trade equipment in the exchange traded equity internally could be one of the reasons. But we...
In any case, these are just purely technical reasons, and there is absolutely no pressure on margins brought by the competition.
Lorena, the EUR 6 million, much -- the banking question. Yes.
Lorena, if you want to...
Yes, I can answer to this question. The trading profit in the banking division is related to the hedging activities on mortgages and on our bond portfolio. As you know, in accordance with accounting standard IFS line, their advantages are evaluated taking into consideration a free risk rate that is the STR. [ Coherently ] with the fact that thanks to the collateralization, there is no counterparty risk, while the hedged assets, organic and bond portfolio are evaluated using the Euribor. The spread between these 2 rates widened in the last period, generating this increase. Going forward, we don't expect significant impact, also taking in consideration the expected increase of hedged assets that we will manage going forward.
The next question is from Giovanni Razzoli at Deutsche Bank.
Just one question on my side. Can you provide us with an update on the performance of the U.K. platform in terms of operating profit in the first half. And I was a little bit confused with your comments during the call because at the very beginning, your detailed analysis seems to indicate that it remains a strategic option for the group. While then at the end of your speech, you mentioned that you are discussing with the regulator about the Brexit outcome of that. So shall we take this as a possible strategic revision of the presence in the country?
No, we prefer to be extremely transparent with the market. As a matter of fact, at the moment, the relationship between U.K. and Europe are not exactly at the best possible level. And so we are still in talks with the local regulators for understanding exactly what is going to be the final setup for running the business in U.K. And we will remain positive on the outcomes. But clearly, we can't rule out 100% of that to have an outcome that is going to make the activity there not efficient. But honest speaking, I would be surprised. But considering that there is a discussion underway, we think this is the reason why we prefer to slow down the market activity in U.K., waiting to have by the local authorities, the final setup for keeping and working there.
And on the performance, we confirm that U.K. is remaining profitable from an operational margin point of view. So it means that just excluding the marketing cost, the business is generating more revenues than cost. And so this is a quite remarkable achievement considering the still the small dimension of the business. And this is what is making us extremely relaxed on the possibility to keep on expanding in other regions.
The next question is from Andrea Vercellone of Exane BNP Paribas.
My questions have already been asked. I just ask again one of the questions. You mentioned that you haven't paid interest rates on current accounts since 2012. Obviously, rates have been at 0 since 2016 or 2015 or thereabout. They are going to go to positive, however. And if I look back in 2012, 2013, you did have some interest expenses on your current accounts. So can you confirm that if interest rates were to go to 1%, 75 basis points or even higher, as expected in the forward rate curve, you're still going to pay 0. I understand your liquidity is mostly transactional, but you still need it. So if the money goes away, maybe an incentive to keep it might be required.
Thank you. It is a very good point. And let me go back to 2012, you're right because if you go through our lines, in 2012, we introduced the concept that we are not paying any more interest rates to the clients. But at the same time, we had in place the so-called term deposits. The terms deposits were attracting mostly not transaction liquidity, but liquidity that was looking for remuneration. Then progressively, we eliminated also -- at the moment, we are not providing directly time deposits. On the contrary, we put in place a platform in which we are offering to clients time deposits offered by third parties.
And this is going to remain the plan. So we want to keep very clearly separated the transactional liquidity, which clearly, we are going to keep on paying 0 because I would like to remind that transaction liquidity is the liquidity that is with you just because clients are using your transactional banking, your brokerage and this liquidity is not moving for chasing interest rates.
And then there is another kind of liquidity that is liquidity that is looking for remuneration. And this liquidity is going to be captured by the third-party platforms or better is going to be invested in the market. And so we confirm that we can -- our point of attention is not to retain liquidity because then the tailwind we have in terms of growth of clients -- and when we are continuously explaining that the real strength of the bank is that Fineco is much more a platform than a bank, the reason is that the clients are joining the bank because they are attracted by the fact that everything is working incredibly well, smooth and simple, and this is making the liquidity being extremely sticky and staying with us. And so, yes, in the case we have, for example, interest rates going up much higher than the market is expecting, we don't see any significant impact on our liquidity. What you can expect probably is a cannibalization process on the investing business.
Historically-wise, we know that when you have the 3 months Euribor approaching the level of 2%, this starts on becoming a little bit more challenging for the investing business. But on the liquidity side, absolutely not. We are going to keep on paying 0. And this probably is still and relatively not completely a fully appreciated part of our platform. It was at the beginning when we start our journey and then has been progressively lost considering the negative rates and so on. But yes, we confirm that we are going to keep on paying 0 to clients.
Then I'll ask a follow-up on this. I found it interesting what you added to the question that it won't cannibalize the banking business profitability. That it may have an impact -- may -- depending on client preferences, of course, on the investing income. So on this point, your guidance on medium long-term flows has been around EUR 6 billion since last year. You haven't changed that, but Euribor has gone up. So what makes you confident that, that is still realistic so you don't risk this cannibalization impact?
Now this, as I explained, based on historical experience, the trigger level that is starting on producing an impact on investing business is mostly driven by the short-term rates because this is what is changing the appetite of clients. And the level of rates that historically is starting representing a challenge for the appetite of clients on investing business is when you have the 3 months Euribor approaching the level of 2%. Clearly, this is above what is expected by the forward rate curve. And I want to be extremely frank and transparent with you, if you tell me that tomorrow morning, we are going to have 3 months Euribor 2% level, we are going to be very happy because we are going to make a fortune on the financial income side and just with a small reduction in the expectation on the investing business. So overall, it's going to be in a great scenario for us.
And then, the reason why we are remaining extremely -- reiterating the guidance on the EUR 6 billion of net sales because the numbers on the asset under management business in this first 6 months, the numbers has been in relative terms incredibly strong because we went through the worst beginning of the year in the last probably 20 years. Nevertheless, the floors are there. We are keeping on going. So, what we are observing that our commercial traction clients has been definitely improved. And as soon as we have -- let me say, just natural market conditions, we are going to be back to the normal. We are quite relatively easing. So this is the reason why we are remaining extremely confident on that numbers.
The next question is from Luigi De Bellis of Equita.
2 quick questions for me. The first one is on the banking fees. Looking at the guidance for 2023. I'm just wondering if the increase expect in 2023 is only volume driven? In a scenario of sustained inflation also in 2023. I'm wondering if you can also think about a potential repricing of banking fees, you have still a huge gap in terms of price quality ratio compared to the main online and branch per even wider than in the past?
And the second question on the customer behavior. How are you seeing a change in attitude from your customers due to the higher interest rate? And when do you expect, if any, a change in attitude? What is the level of short-term interest rate that drive a change in the mix of products from your customers?
On the banking fees, you are right. In terms of relative gap to the traditional banking world, we have plenty of room for increasing what we are charging to our clients, but we are not planning to do that because we don't need to do that. And so the guidance is just only volume-driven. Regarding the customer behaviors, as I was explaining [indiscernible] to the Andrea's question, based on our historical experience, usually, we expect a potential impact on the clients' behaviors and their appetite in subscribing, investing products when you have the short-term rates. So let me say the 3-month Euribor approaching the 2% level because the clients are mostly driven by short-term rates so they are not driven by the level of that present there, the 10 years and so on. So the normal clients are driven by that.
And so yes, if we have, for example, 3 month Euribor approaching the 2% level, it's reasonably expected the beginning of a kind of cannibalization effect on the investing business. But as I was explaining, the big advantage that Fineco has that being a platform, we are going to -- is much more what we can get, but that kind of scenario respect on what we can lose in terms of declining revenues on the -- not declining revenues, slowing growth on the investing business.
The next question is from Angeliki Bairaktari of Autonomous Research.
First of all, with regards to the cost outlook that you have reiterated for 2022. I was wondering how should we think about cost growth in 2023, considering your international expansion plans in Italy, but also potentially in other European countries, as you have mentioned in today's presentation. Then with regards to the ETF introduction in the third quarter, can you give us some color, sort of which customers will be targeted to be offered ETFs? And what will be the pricing on those products relative to the active funds that you have on the platform? And also with regards to the brokerage only current account, can you explain to us what is the rationale for offering these current accounts separately from the banking current accounts that you have? And am I right to expect that the remuneration on the brokerage on the current account is also going to be 0 going forward?
And lastly, on the third-party savings platform, you mentioned that for customers looking to get some yield from their deposits, you will direct them to off-balance sheet solutions via that platform. What are the volumes that you have collected in third-party time deposits at the moment? And are those volumes included in your assets under custody?
Yes. So on the cost outlook, really, is related, as we explained to the organic growth of cost for the operational running cost sorting. We are not considering additional expenses to put on, for example, international expansions plans and so on, but [ in case ] considering that 2023, also we are particularly fast in expanding presenting Germany, you have not to expect anything that is going to be really significant in terms of costs.
But in any case, when we are giving the outlook of cost as related to the ordinary activity of the bank because what we think that is important is to give to the market the flavor of the efficiency of the bank. And so the operational gearing we have then everything that is on top of that, it's another story. So for example, if at a certain point, we observed that we have in front of us particularly favorable market conditions that is -- and that can be a good idea to invest more in marketing, we are going to take the opportunity, but this is not going to change anything. It's going to be kept separated by the evaluation of the operational efficiency of the bank because I think that for the investors, what is important for them is the operational hedging of the bank that is this the real point of strength.
The fund ETF, you probably are referring to that, which is the rationale of this and the customer target. First of all, the main rationale is to be able to provide to our clients and to our financial planners solutions characterized to be extremely transparent because there is anything more transparent than passive solutions. At the same time, characterized in a quite relevant level of convenience for clients, because it's a matter of fact that these products are catered by a much lower total expense ratio of clients. The fact that we are internalizing completely the production of these solutions, the result that in terms of margins, this product are extremely profitable for us. So for example, our advisory solutions based on the usage of this passive solutions manufactured by Fineco Asset Management. At the end of the process, we expect a profitability that is going to be close to 60 basis points after tax, so that is slightly above the target profitability we are giving to the market for 2024. And this simply because everything is directly manufactured by us, and we have not to split anything with third parties.
The customer target, in this case, as we explained, the highest appetite for these solutions is different in by what is stocked by the market is more in the direction of the rich clients. So the rich clients are emerging as extremely interested in efficient, transparent and low-cost solutions. But, the nice part of the story, thanks to the posted control of the operational side of the story, we can combine together convenience for clients and profitability for the bank.
On the brokers-only kind of account, which is the rationale in -- Paolo, do you want to give us some more color on the rationales.
Yes. So basically, as I was saying before, 3 main reasons: the first is simplification with a different brokerage on the account. We are much faster on onboarding new clients. We are required to ask much less data from our clients, from the new clients with much faster onboarding, and we are going to be much more also the interfaces of the website and the application are going to be much easier because much more simplified.
The second reason is that we are going to better segment in terms of pricing or the products we're offering. And the third is this kind of brokerage-only account will be also the base for our international expansion. So basically, these are the main reasons.
Paolo, also because another very important point that Fineco is characterized by offering to clients a real full one-stop solution. But sometimes with some clients, particularly young clients and so on, the reaction of these clients in front of the Fineco platform is great, is incredibly rich platform, but it's too much. I don't need to have all these stuff together and what I need is something that is a little bit simpler. And so we are just providing something that is with less heightens components in order to fulfill the expectation of these kind of clients. And yes, the remuneration is going to be 0 because the liquidity attached, this brokerage-only account by definition is transactional liquidity.
The next question is from Elena Perini of Intesa Sanpaolo.
Excuse me, because there was another question because we had the delay in scrolling the question. So there was, Angeliki, a third-party deposit platform volumes. So we have collected at the moment. These volumes are accounted in assets under custody. And the volumes at the moment are relatively small because, again, the level of rates is still too low for really attracting the interest of clients. And this is confirming that in order to have a more interest by clients this direction we need to have and definitely higher rates. Sorry, Elena, if I interrupt you.
The next question is from Elena Perini.
I've got to 2 questions. The first one is on the net financial income on your guidance for 2023 of plus 30%-35%. So if I understood correctly, you are taking the EUR 330 million as a reference point, the guidance for 2022 for a resulting point. So basically, you would have more than EUR 400 million net financial income next year made by net interest income. I was wondering what is the effect that you expect in terms of growth from volume contribution and from margins. And the other question is about the brokerage business, because while in the first half, you had an average of EUR 16-17 million per month in terms of revenues. Now in July, you had EUR 13 million. I was wondering what we can consider as a new monthly rate going forward, perhaps EUR 5 million or something like this.
Yes. On the net financial income, you are right. We are keeping in order to give the guidance for 2023, the reference point is the EUR 330 million of the 2022. And the assumptions behind it is to have probably net new liquidity, new gather deposits in the region of a couple of billions of euros. That is absolutely perfectly linear with the history of the bank. And secondly, the other assumption, we are -- these numbers is based on the forward rate curve that has been updated at yesterday. So that is probably the most updated forward record we have. And yes, clearly, the net financial income is going to be definitely above EUR 400 million and is going to be represented exclusively practically by net interest income. So not with any treasury management. And I'm asking Lorena to jump in if I'm saying something that is wrong in terms of the...
It's correct.
Yes. So in terms of volumes and margins, so the volumes, we say it, so a couple of billions of more liquidity gather, but this is perfectly current with expected growth of the bank and the margins, again, are driven by the evolution of rates and we are using the forward growth we are using this updated to yesterday.
On brokerage, it's very difficult to give such a precise guidance on the average revenues generated on a monthly basis by brokerage because brokerage is impacted by elements that we are not controlling. That is mainly the volatility and particularly the volumes on the market. And this is the reason why we prefer to give the indication where is that when we are -- for us, what is important is to monitor the floor of the business. So what we are producing in when the market is not favorable to brokerage. And July has been an absolutely complex month for brokerage, generally speaking, exactly for the lack of volumes.
And so I think that it's up to you because it depends which kind of expectations you can make models. So say, if you want to be incredibly conservative, you can say I'm expecting that the market is characterized by volumes that are going to be close to historical loss for the future or not or you can use volumes that are more in line with the normal math. So it's very difficult to give such a kind of --- brokerages, by definition is volatile exactly because we have the impact produced by elements that we are absolutely, we are not controlling. For us, it's important to monitor the floor. And the numbers are telling us that if we consider a period of time of the past [indiscernible] by level of volumes at the same low level, now the revenues we are generating are definitely much higher. And this is what is making us extremely positive and on the future evolution of brokerage.
The next question is from Gian Luca Ferrari of Mediobanca.
The first question is on the guidance on flows. I think you are confirming the EUR 6 billion a year in terms of total flows. I think last summer, you also got a guidance on funds, specifically EUR 6 billion a year. We are at EUR 1.4 billion in the first half. I was wondering what are your expectations for 2022 in terms of overall flows in FUM.
The second is our recruitment. I think it is pretty tough to recruit people in this period. I remember you were also focusing on young people to train internally, but I was wondering what are your experiences so far with most senior advisers if you are able to recruit or you are experiencing a slowdown.
The third and final is on products. If you have any kind of appetite or demand for capital guaranteed products. I see you are due to launch smart defense equity and products where it seems you are protecting a bit the performance of customers, if you can add a bit of color on the new product launches?
So let me start by the guidance on flows on Fineco Asset Management and thank you for raising the point because this is an interesting point. So if you go through our presentation, we went through a lowering of guidance on the retail sales of Fineco Asset Management both on 2022 and also on 2023. And this is driven by a change in the appetite by clients on products because now -- and so I'm taking the opportunities also to answer to another question you made. So what we are observing is also is this is a change in the appetite for clients for solutions. So for example, now what is emerging is a growing demand for investment solutions, insurance wrappers and so on. And in particular, the growth of the insurance swapper, by definition is decreasing the room for sales of Finance Asset Management retail sales.
But at the same time, it's increasing the room for the underlying sales. So the building blocks that are used for the insurance swapper, for example, are made now 100% by the Fineco Asset Management underlying solutions. So what we expect to miss in terms of Fineco Asset Management retail sales is going to be recovered through the underlying Finance Asset Management Solutions. And this is the reason why putting listing together is not changing too much in terms of expectation of the evolution of margins and revenues.
Clearly, in this part because another question has been if there is an interest by clients for protected products and so on, the answer is that the risk interest by clients for solutions characterized by an approach that is conservative. For example, the insurance wrappers that we are combining together the protected components with the progressive exposure to the markets are very, very welcomed by clients and the same story for the decumulation products, but you are familiar with the story.
So yes, there is an increase of demand by clients for solutions that they are making the entrance on the markets a little bit more under control. So if Gianluca are so kind to scroll -- Yes.
Recruitment, yes. So on recruitment, as we explained, the reason structural change in the market underway. So first of all, now the lion's share is made by bankers. So people that are at the moment working as employees in banks that they are more and more deciding to jump and becoming bankers and joining organization like, for example, Fineco. And these bankers, for them, the main priority is to have a business part catered by a high level of efficiency from an operational and technological point of view because this is the new dimension of interaction with clients.
And second, a business partner catered to being extremely fair and transparent. Fineco is emerging as the perfect landing spot for this new generation of future financial planners. And so we are recruiting bankers that they are in their 40s mostly. So they are absolutely senior guys with an extremely important future developments in front of them. At the same time as well, we are keeping on investing on the young generation in order to build up the financial payments of the future, because one of the biggest challenge for the industry is the hedging of the network. And so you have to keep on taking on board also young skilled colleagues.
But the most interesting change that is underway in the market, is this extremely important contribution generated by bankers. And the bankers are definitely looking for efficient business partners and transparent because they want to keep on growing and keep on doing their job for many years to come.
[Operator Instructions]. Mr. Foti, there are no more questions registered at this time.
Thank you for the very interesting questions you raised. And as usual, if you need to make some more deep diving in our numbers and the evolution plans and so on, please make us a call, we can arrange a follow-up anytime. Thank you again.
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