FinecoBank Banca Fineco SpA

MIL:FBK

Earnings Call Analysis

FinecoBank Posts Strong First Half, Raises 2024 Outlook

FinecoBank reported a net profit of EUR 320.3 million for the first half of 2024, up 9.8% year-on-year. Revenues rose by 9.6% to EUR 658.3 million, driven by growth in all product areas, especially brokerage which climbed 13%. Operating costs increased by 6.7%, leading to a cost/income ratio of 24.4%. Fineco expects record revenues for 2024, with low double-digit growth in investing revenues and stable banking fees. The bank's CET1 ratio is projected to grow from 25.8%, and they anticipate a higher dividend for the year .

Strong Financial Performance

In the first half of 2024, FinecoBank reported a net profit of EUR 320.3 million, reflecting a 9.8% year-on-year increase. Revenues reached EUR 658.3 million, rising by 9.6% from the previous year. This growth was driven by robust performances in net financial income, which grew by 10.7%, and brokerage activities, which soared by 13%【4:0†source】【4:1†source】.

Operational Efficiency and Cost Management

FinecoBank maintained strict control over its operating costs, which were EUR 160.3 million, showing a modest increase of 6.7% year-on-year. The cost/income ratio stood at a commendable 24.4%, underscoring the bank's operational efficiency【4:0†source】【4:2†source】.

Exceptional Commercial Performance

FinecoBank's organic growth strategy yielded remarkable results, with new client acquisitions up by 22.5% year-on-year. The bank also recorded solid net sales of EUR 5 billion. The capital position remains robust, with a common equity tier one (CET1) ratio at 25.8% and a leverage ratio of 5.35%【4:0†source】【4:2†source】.

Guidance and Outlook for 2024

The bank has provided a positive outlook for 2024, expecting record-level revenues with a significant shift towards commissions. Investing revenues are projected to grow by low double digits, while banking fees are expected to remain stable. The brokerage segment is anticipated to continue its strong performance. Operating costs are forecasted to increase by around 6%, excluding additional costs for Fineco Asset Management and marketing expenses. The cost of risk is expected to be between 5 and 10 basis points, and both the CET1 and leverage ratios are forecasted to rise year-on-year【4:2†source】【4:3†source】.

Investment and Brokerage Segments

Investing revenues for the first half of 2024 were EUR 174.7 million, up by 11.9% year-on-year, supported by growing volumes and efficiency improvements through Fineco Asset Management. Brokerage revenue was EUR 111.6 million, showing a significant increase compared to pre-COVID levels, driven by an expansion in the active investor base and an evolving market structure【4:2†source】【4:3†source】.

Strategic Focus on Sustainability

FinecoBank continues to prioritize sustainability, with its business model focused on transparent and fair investment solutions. The bank's asset management and advisory services are well-aligned with market trends favoring quality and efficiency. This strategic focus has resulted in a stable margin environment despite wider industry pressures【4:2†source】【4:4†source】.

Expansion and Market Share Growth

FinecoBank is positioned for future expansion, with plans to maintain an open platform to attract higher market shares and cater to the upper-end market. The bank's strategy includes a mix of organic growth and potential new market entries, particularly leveraging its brokerage platform. Recruitment efforts focus on enhancing the quality and productivity of the financial planner network【4:10†source】【4:11†source】.

Capital Allocation and Shareholder Returns

FinecoBank's strong capital position will allow it to continue investing in organic growth opportunities. Excess capital will be returned to shareholders, with a preference for share buybacks over increased dividends. This approach ensures the best interests of all stakeholders are served【4:0†source】【4:1†source】.

Earnings Call Transcript 2024-Q2

[Operator]

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the FinecoBank Second Quarter 2024 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 Fineco. Please go ahead, sir.

[Alessandro Foti, executive]

Good afternoon, everyone, and thank you for joining our second quarter 2024 results conference call.

Net profit in the first half of 2024 is EUR 320.3 million, up by 9.8% year-on-year, excluding systemic charges due to a different seasonality compared to 2023. Revenues at EUR 658.3 million, increasing by 9.6% year-on-year and supported by all our product areas. Net financial income is increasing by 10.7% year-on-year, investing up by 11.9% year-on-year thanks to the volume effect and the higher control of the value chain by Fineco Asset Management. And the brokerage is up by 13% year-on-year, thanks to the enlargement of our active investors. Operating costs, well under control at EUR 160.3 million, increasing by 6.7% year-on-year by excluding costs related to the growth of the business. Cost/income ratio was equal to 24.4%, confirming operating leverage as a key strength of the bank.

In the first half, Fineco confirmed once again outstanding commercial performance thanks to our organic growth strategy. First of all, we recorded a strong acceleration in our new client acquisition, increasing by 22.5% year-on-year with a further increase on 2023 record year. On this, let me highlight that we are not just growing fast on the overall numbers of new clients, but we are coupling this with an improvement of the underlying quality. Second, very solid net sales at EUR 5 billion. Our capital position confirmed to be strong and safe with a common equity tier one ratio at 25.8% and the leverage ratio at 5.35%.

On the right-hand side of the slide you can find the summary of our 2024 guidance with the outlook that has improved even more, and we are expecting another record year for our net profit. More in detail. Revenues, we expect them at the record level with an improvement of the mix in favor of commissions, thanks to investing revenues expected to increase low double digit versus 2023 with a natural market assumption going forward. Banking fees expected stable versus 2023. Brokerage, we confirm for 2024 expected revenues strong with the floor higher versus pre-COVID period. On operating cost, we expect then 6% growth year-on-year in 2024, not including additional cost mainly for Fineco Asset Management and marketing expenses. We expect our cost of risk in a range between 5 and 10 basis points in 2024. And finally, we expect in 2024 a growing CET1 and leverage ratio year-on-year.

Let's now move on Slide 5. As announced, net profit in the first half of the year stood that EUR 320.3 million, increasing by 9% year-on-year, excluding systemic charges due to the different seasonality compared to 2023. Revenues at EUR 658.3 million, up by 9.6% year-on-year as we have been able to catch the strong acceleration of the structural trends in place. The growth of our net financial income increasing by 10.7% year-on-year is supported by our high quality and capital light net interest income. Net commission increased by a sound 6.2%, driven by the solid contribution of the investing up by 12% year-on-year and brokerage business up by 11.4%.

Trading profit increased by 25.4% year-on-year, mainly thanks to higher brokerage activity. Operating cost at EUR 160.3 million well under control and increasing by 6.7% year-on-year, excluding cost strictly related to the growth of the business, mainly additional cost for Fineco Asset Management to further expand its business and having an higher control of the revenue chain, additional marketing cost to further improve our growth and catch the strong momentum of the business.

Let's now move on to Slide 6 for a deep dive on the performance of the investing business. Investing revenues reached EUR 174.7 million in the first half of 2024, increasing by a solid 11.9% year-on-year on the back, both growing volumes thanks to our best-in-class market positioning and of the higher efficiency of the value chain through Fineco Asset Management.

Let me please remind you the great quality of our investing revenues mirroring our transparent and fair approach towards clients. As a result, our revenues are mostly driven by recurring management fees with no performance fees at all. Let me underline that this set of results is particularly remarkable given the more challenging marketing environment for the asset management industry. Also, the bank is going ahead with its plan to deeply reshape its products and services offer to better fit with the new context. This will give more fuel to our growth ranging in the month ahead and will allow us to keep on adding new market shares.

Let's move on Slide 7 for a focus on our asset management company and our advanced advisory services. In this slide, we are representing the 2 main sources of growth for our investing business going forward. On one end, as you know, Fineco Asset Management is progressively delivering in increasing the control of the investing value chain. Each contribution to the group net sales has been consistent over the cycle thanks to its incredible time to market in delivering new investment solutions perfectly aligned with what clients are looking for.

As a result, the contribution of Fineco Asset Management out of the total stock of asset under management has been steadily growing and it is now equal to 35.4%. On the other end, being a platform, Fineco is the best place to catch the latest trends in terms of clients' investment behaviors. There is a clear change under way in the structure of the market with clients increasingly looking for quality, efficiency and fair solutions.

All of this is channeling a strong demand towards advanced advisory services with an explicit fee where Fineco is by far the best positioned in Italy. As you can see down in the slide, thanks to our operating efficiency, we are fully catching this powerful trend in a way that is keeping our margins pretty much stable, allowing us to be very positive on the sustainability and the quality of our growth going forward.

Let's now move on to Slide 8 for a focus on brokerage. Brokerage once again registered excellent results, confirming a structural increase in client's interest to be more active on the financial market and building up a clear bridge between the brokerage and investing world. In the first half, revenues were equal to EUR 111.6 million, resulting in a monthly average around 65% higher compared to the monthly average revenues in the period 2017- 2019 this confirming structurally higher floor.

Let me remind you that the growth of the brokerage business is driven by the contribution of 3 structural components. First, the continuous process of deep reshape of our brokerage business. Second, the widening of our client base using the platform with active investors growing significantly in absolute terms. On this, let me [indiscernible] that in the last few months we are experiencing a further enlargement of our active investors, which are growing much wider also compared to the post-pandemic period. Third, we are continuously increasing our retail market share.

Let's now move on to Slide 9 to further deep dive on the potential of our brokerage business given the most recent development. Let me spend a few words on the most recent trends in our brokerage business. As you can see in the graph on the top of the slide on the left, our base of active clients has recently seen a substantial increase, around 20% higher compared to 2023, and with a 40% step up compared to the level recorded during the pandemic, the driver of such an increase are all structural. Namely, we are delivering on a number of new initiatives like the new brokerage-only account and the new platform FinecoX. The new market structure is confirming the bridge between brokerage and investing. The most recent increase in the rate environment has resulted in a renewed interest in [ Gladis ] with Fineco emerging as the platform of choice for clients. In the graph down in the slide we are showing that executed orders has been increasing this year compared to 2023 and is back at the pandemic levels despite the poor market environment for brokerage overall in the year.

Let's now move on to Slide 11 for a focus on our capital ratios. Fineco confirmed once again a capital position well above requirement on the wave of a safe balance sheet. Common equity tier one ratio at 25.78% and the leverage ratio at a very sound 5.35%. While risk-weighted assets were equal to EUR 4.78 billion. Total capital ratio at 36.24% as of June 2024.

As for the liquidity ratios, liquidity coverage ratio is at 882% and net stable funding ratio at 369%. While the ratio high quality liquid assets on deposits is at 73%, well above the coverage of the industry. Going forward, we confirm that we will continue to generate capital structure organically, thanks to our capital-light business model. Excess capital we are going to generate will be partly used to further invest in our organic growth opportunities. While for the remaining part, which in any case would be the most relevant one, by the end of the year we're going to define the amount and terms for the distribution to the market.

Let's now move to Slide 13 for a focus on the acceleration of our commercial dynamics. Let me spend a few words on the strong acceleration on our new client acquisition, which is even more remarkable considering the context and bodes extremely well for our future growth. As you can see from the graph on the top of the slide, new clients year-to-date were 22.5% higher, outgrowing 2023 record year. These outstanding results has been achieved keeping our marketing strategy unchanged and translates in high quality and sticky client base, key to grow in a healthy business in a long-term horizon.

Let me highlight that we are not just growing fast on the overall number, but we are coupling this with an improvement of the underlying quality of new clients. As an example, private banking clients are growing by an impressive 30% year-on-year. Down in the slide, you can see the usual highlight of the improved efficiency of our marketing engine thanks to our innovative brand new onboarding process. On top of this, we are now leveraging on AI and data-driven marketing, which are allowing the bank to connect with prospect clients in a more personalized and efficient way, leading to a further acceleration in our client acquisition.

Let's now move to Slide 17 for a deep dive in our transactional liquidity. The granularity and stickiness of our deposit base is confirmed quarter-by-quarter. Our clients have an average ticket of around EUR 17,000 and the median ticket of EUR 4,500. On top of this, differently from other players, mostly focused on brokerage and investing our successful one-stop solution relies on a fully fledged banking platform with around 50% of our clients crediting salary and pension with us. Down in the slide we show our usual breakdown of the deposit net sales and where we once again saw [indiscernible] an increase in the net new liquidity before investments. As you can see, up to the end of June, the bank collected EUR 9.2 billion of liquidity coming from salary and pensions and EUR 6.3 billion from net bank transfers. After the expenses in cash bills and taxes, deposits were up by EUR 4.1 billion. Once taking into account investments in assets under management, investment [indiscernible] the final result is minus EUR 0.9 billion of deposit net sales.

On the graph on the right we confirm the trend in terms of liquidity flows per cluster of clients, clients with total financial assets up to EUR 100,000, increased the amount of liquidity in the bank and this is mainly transaction. On the other hand, the cash sorting process has been more than 100% driven by wealthier clients, which in the past accumulated excess liquidity waiting to be invested. For private banking clients, the liquidity as the percentage of the total financial assets is at 10% as of June, at the lowest level since 2015, suggesting that they are approaching the floor. Finally, please note that the new clients acquired in the year also brought positive liquidity.

Let's now move on Slide 19 for a focus on our guidance. 2024 guidance, with -- the outlook has been improved even more, and we are expecting another record year for our net profit. Revenues are expected to be at a record level with an improvement of the mix in favor of commissions, thanks to investing revenues for which we expect a low double-digit growth versus 2023 with a natural market effect assumption going forward. Banking fees are expected as stable compared to 2023. Brokerage revenues are expected to remain strong with a floor in relative terms with respect to the market context that is definitely higher than in the pre-COVID period. Operating costs are expected to grow at around 6% year-on-year, not including additional costs mainly for Fineco Asset management and marketing expenses. Cost income, we expect it comfortably below 30% thanks to the scalability of our platform into the strong operating gearing we have. On capital ratios, we expect a growing CET1 ratio and leverage ratio year-on-year currently with a combination of both a strong acceleration in the growth of the bank and the distribution of general dividend.

On leverage ratio, our goal is to remain above 4.5%. We expect a higher dividend per share for 2024. Cost of risk was equal to 5 basis points, thanks to the quality of our lending portfolio, and we expect it in a range between 5 and 10 basis points. Finally, we expect a robust and high-quality net sales, keeping our priority in direction of asset under management and the continued strong growth expected for our client acquisition as we are in the sweet spot to keep on adding new market shares.

Thank you for your time, and now we can open the call to your questions.

[Operator]

[Operator Instructions] The first question is from Azzurra Guelfi, Citigroup.

[Azzurra Guelfi, analyst]

Couple of questions for me. One is on the outlook. What has driven this improved outlook? And then if you can give us a little bit more color on what do you mean by record net profit and also looking at the various moving parts, especially the investing revenue doesn't look very different from the previous guidance. The second question is a little bit more broad and strategic. I'm just asking you, the Fineco has been passed over a large group in the past and then has been listed as an independent company for the recent years. And what do you think are the main difference between the 2? And how do you see the group in the medium term, also in light of what we have seen on the press last week?

[Alessandro Foti, executive]

Regarding the improvement of the outlook, the rationale behind is because as you are -- is clearly emerging by the numbers, all the 3 engines of the bank are doing pretty well because we have the -- definitely the financial income is going quite well, thanks to the combination of a rate that are remaining and higher for a longer period of time, we expect what the market was expected at the beginning. Second, there is -- we have the clear evidence of a continuous progressive slowing down of the cash sorting process. And so this clearly is going to bring going forward, particularly towards year-end and a positive evolution on the pace of deposits. Then on the investing side, the business is gaining steam, and this is happening despite rates are still quite high. And so this means that clearly this is boding extremely well for the future. And finally, brokerage is doing extremely well. So it's keeping on building up. And during our call, we explained also the rationale behind. So if we put everything together, everything is moving. It's not so usual to have all the 3 engines of the bank working at the same time in the right direction. So this is the case. And so we expect record profit. This will mean that we [indiscernible] we expect to make a net result that is going to be definitely higher than we had last year. And Fineco has been for a long period of time part of large groups which is the main difference with being a public company. The main difference in being a public company that the real difference is mostly in the favor of the stakeholders of the bank because the public company is the best position as a kind of company for servicing in the best way the interest of all the stakeholders because the shareholders, the clients and the people working in the organization for a very simple reason because a public company is forced to do everything it's doing in the -- exactly in the direction of being positive for the market. There is no risk that you have to put in place, strategies or activities that they are in the interest of, let me say, a controlling shareholder. So this is the main. At the same time, it's clear that we have to accept the -- so there is, for example, the big difference that the stock is extremely liquid. And in the most part of the case, this is very positive because a very liquid stock needs is making the potential shareholders more interested in investing in our structure. Sometimes the liquidity of the stock is exposing us to more volatility on the market because Fineco is part of many different kinds of basket. And so you have to set a little bit more volatility on sometimes. But overall, being a public company is mostly in the interest of the shareholders and the others stakeholders. So how we see the company in the future? We think that the Fineco is on the fast lane for keeping on accelerating in growing market share, is going to be going forward in the next few years, it's going to be a much bigger company than we are now. The structural trends which we [indiscernible] are gaining steam, and we have in front of us [indiscernible] that is evolving in interaction that is our direction.

[Operator]

The next question is from Domenico Santoro, HSBC.

[Domenico Santoro, analyst]

One question on the NII and one question on fees/margins. I see that the contribution from financial investment has gone up quarter-on-quarter. If my understanding is correct, you have increased the fixed rate component, increased the duration a little bit also on your book. So my question is, how should we look at the mix viable against fixed rate going forward if you have a target? And how much you can continue in a way to protect your NII from falling rates. The other question is on Page 7. Thanks for giving the stock of AUM and advisory. Can you let us understand how margins on the stock under advisory compare with the remaining part of the stock. So with the part which is not under advisory. I'm not sure you can give us an average margin or just some qualitative comments. I wonder if moving more and more clients under advisory will not protect you only from regulation. But going forward, this could be also margin accretive in a way.

[Alessandro Foti, executive]

Regarding the evolution of the net interest income, probably I don't know if -- I'm leaving the floor to our CFO that can give you a much more precise details on from this. So Lorena, please, if you want.

[Lorena Pelliciari, executive]

Thank you, Alessandro. Good afternoon to everybody. So in first quarter -- in the second quarter, we had an increase in net financial income that was higher quarter-on-quarter plus 2% due to the higher volumes of liquidity that we invested in financial investments and in ECB. This is resulting from the issuance of EUR 500 million of AT1 in March. That was partially offset by EUR 168 million repurchased under the tender offer on EUR 300 million of nominal AT1 amount issued in 2019. Consider that also at the beginning of June, we replaced an AT1 issued in 2018 we cut back. And so this means that going forward, the volume related to AT1 are going to decrease, as we have already recorded the EUR 200 million in June, that is the private placement. And at the beginning of December, we will call back the remaining part of the EUR 300 million of the private placement still on the market after the tender offer we got in March. Regarding the component mix in variable and fixed rate, we increased a little bit the component of fixed rate. We are now at 63%, but the duration and the maturity has decreased because we are investing in European bonds with a maturity up to 3 years.

[Alessandro Foti, executive]

So regarding the assets under management under advisory. So, a preliminary consideration. So as we were explaining that what we are observing structural changes into the market. So recently there has been quite important debate in Europe regarding the possibility to introduce a ban on the inducement. And at the end of the story, the ban has not been introduced. But what is going to change that is changing the structure of the market, probably the change -- the biggest changes are not going to be driven by the regulators, but are going to be changed by the change in terms of behaviors by client. It now is emerging absolutely evident that particularly the upper end of the market is becoming more and more interested in getting solutions characterized by fairness, transparency, efficiency and this is the trend. Fineco, [indiscernible] by the large part of the industry is exactly in that kind of direction. So we are not going against the wind, but we are sailing with the favor of the wind. And this -- you are completely right, is extremely positive going forward because it means that we are going to be definitely -- our business is going to be definitely characterized by a much stronger sustainability. Also, our margins are going to emerge as much more resilient, we expect other kind of practices. And in any case, what is remarkable that this is happening without any real significant impact on our margins because if we look to our flows, the main components of our flows are on one hand a big growth of the assets under management on the advisory platform, at the same time, a continuous decrease of the insurance products and the insurance products, by the way, are the products with the lowest margins. So if you put everything together, you put together this big growth of the advisory platform of the advisory solutions. The decline of the insurance partner also taking in account and still a higher appetite for fixed income solutions that is clearly this is not particularly positive for the margins. But overall, the mix is emerging as extremely stable at the level of March. But if you are patient also going a little bit back in the past, you can see that Fineco is emerging as the one of the organization with the most stable margins, rising margins in the industry that is continuously experiencing a decline in margins. But the reason is pretty simple. Fineco is positioned in a way that is exactly current with the new emerging trends. And this sometimes is not the case for other players. So, it is -- and we think that this is going to be definitely a very important change in the market.

[Operator]

The next question is from Enrico Bolzoni, JPMorgan.

[Enrico Bolzoni, analyst]

The first question is again on investing. So I noticed that there was a very small decline in the investment margins quarter-on-quarter. I suspect these results from 3 forces. So on one hand you have outflows from insurance which I appreciate is low margin going into FAM which is high margin. But at the same time, you are experiencing quite a lot of flows that within the adviser on top service are going in assets under custody, which I understand to be margin dilutive. So considering that this closes have been quite substantial over the last couple of months, I just wanted to understand from you what sort of margin should we expect going forward? Is it correct to model some sort of flattish stability in margin, investment margin over the next few quarters? Do you still think that because of the outflows from insurance and the inflows in FAM, we should expect positive growth in margins for the residual of the year, but also looking at next year, for example. So that's my first question. The second question, it's again partially related to that. So I appreciate that ETF classifies as an under custody within an advise on top solution. So how concerned are you that the growing demand for ETF products in the industry might somehow cannibalize the FAM products. So the expense of FAM you might just end up having more clients asking for ETFs? And then finally, I wanted to ask, can you provide a breakdown of how much revenue the new brokerage-only platform contributed in the second quarter of the year? And what sort of growth do you expect going forward?

[Alessandro Foti, executive]

Starting by the first question, you are right. So the evolution of margins are driven by mostly 3 components. One is the growth of the advisory solutions with alarge part within the asset under [indiscernible] they are playing an important role. Second, the continuous outflows from the insurance products. No, really, there are more than 3 reasons. Third, there is the continuous progress made by Fineco Asset Management. And fourth, we have also the mix that is remaining mostly focused on fixed income solutions. If we put everything together, so assuming that there is anything particularly significant happening, we -- I think that the most correct way to look at is kind of stability in margins that as we were underlying before, it's an absolutely remarkable achievement in a context in which the name of the game is a pressure on margins. And regarding the possible concern on the -- so it's a matter of fact that there is a booming trend, is represented by the appetite by the market for ETFs, these structural trends. That is exploiting all over the world. And definitely we are not concerned by possible cannibalization of Fineco Asset Management products because the positioning of Fineco Asset Management, I would like to clarify the point is Fineco Asset Management is not competing against ETFs. Fineco Asset Management, the strength of Fineco Asset Management is its capability to first of all continuously interacting with financial planners and clients and understanding the emerging needs by them and then being incredibly fast in bringing to the market what the clients are looking for. So if you look throughout the -- what Fineco Asset Management is offering, Fineco Asset Management is offering investment solutions that are not available in the market. And this is the reason of that success. And [indiscernible] if they were competing directly against ATFs, this would be not a great strategy. Fineco Asset Management is bringing exactly what the market is not offering and what the clients are looking for. I don't have in front of me the precise numbers of the revenues generated by the only brokerage platform, and we can give you these numbers later on. What for us it's important to underline that the brokerage is growing big because there is an absolutely evident change in the structure of the market. We were referring to a continuous overlapping between vesting in brokers. This is exactly what's going on. The huge advantage that Fineco has that being at the same time an asset gatherer in the platform, we can observe what's going on, and we can take advantage by this. So this is the real. And then this is the reason why we are remaining extremely positive on the future evolution of brokerage.

[Operator]

The next question is from Elena Perini, Intesa Sanpaolo.

[Elena Perini, analyst]

Actually I've got 2 questions left. The first one is about the trends net inflows. You talked about the slowing down of the cash sorting process. So I was wondering if you can share with us what you observed in July, if the liquidity is improving and if the progress that we saw in the assets under management in the past months is going to be confirmed. The second question is about the brokerage. So you clearly talked about the fact that the trends are better than some time ago. So I was wondering if a level of revenues and annual level of revenues of at least EUR 200 million could be considered as a floor going forward.

[Alessandro Foti, executive]

Regarding the, some anticipation on the July inflows, clearly we are still a couple of days missing our activity, but we can say that for sure, we -- so the net sales that have been strong because clearly every time you have to compare this with -- we have to take into account the seasonality of the period. But if we look to that, so the net sales, they are strong. Second, also the asset under management is confirming the progress because the numbers are going to be much stronger than we experienced during the July of last year. And also on the liquidity side, there has been -- there are absolutely positive signals emerging despite that July is a month characterized by quite relevant tax payments, but yes. And brokerage as well has been and we can say that has been a strong month. So if we put everything together, July is going to be an absolutely positive month for the bank. And the brokerage, so it's -- regarding the other question, it's always extremely difficult to fix a precise floor on the revenues on the brokerage because as you know that the brokers can be affected by short-term temporary situation like I'm referring to the volatility, the volumes and so on. And what we can see that the floor is going up, but giving you a precise number. So we think that it's not serious. But if you look to the evolution of our numbers, it's the growth of the floor is pretty evident. And there are no reasons that this floor cannot keep on growing, keep on -- keeping on growing exactly because this growth is driven by structural reasons and trends.

[Operator]

Next question is from Giovanni Razzoli, Deutsche Bank.

[Giovanni Razzoli, analyst]

Two questions on my side. The first one is on the performance of the, commercial performance of FAM product, which in the second quarter was still high, contributing 77% to gross inflows, but it was remarkably down quarter-on-quarter. I was wondering whether this reflects a deliberate change of product mix, the new offer or what is behind this trend in your opinion? And the second quarter is on the guidance of investing fees, the low double-digit growth, which also here implies a quite remarkable acceleration in the second half, taking into account the seasonality of the third quarter. So I was wondering whether you do expect an acceleration, for example, in the contribution from new products, from upfront fees or what is behind this implied acceleration?

[Alessandro Foti, executive]

So regarding the performance of FAM, this is absolutely correct with the more we have the investing business gains steam. It's normal that FAM is returning in terms of percentage to, let me say, to a normalized level. So in the past, we had -- in the past we had a period of time characterized by extremely difficult times for the investing business overall for the industry. And Fineco Asset Management was the only one able to bring to clients something real smart that's on the interest of clients. Now we are entering in a more positive environment for the investing business. So this means that the investing business is going to keep on gaining steam, and it's absolutely normal that we are going to have higher volumes on the investing business, and we're a little bit lower percentage represented by Fineco Asset Management, but that is going to maintain the lion's share of the business. So this is absolutely aligned with the progressive normalization of the market. On the guidance on investing fees, clearly but from a mathematical point of view, this does not imply any particularly strange or great acceleration in the second half, is going to be -- it's -- there are assumptions we are behind that are absolutely reasonable. And from the upfront, we are not expecting any significant because as we underlined during our presentation. So we are remaining -- our business model is remaining a business model mostly characterized by recurring fees and we don't expect any significant change going forward.

[Operator]

The next question is from Marco Nicolai, Jefferies.

[Marco Nicolai, analyst]

I was wondering if you can give us an updated view on the deposit flows into the second half of the year. And once the cash sorting effect is over, I'm not sure if it's going to be this year or next year. So but when that's over, what's the capability of the bank in terms of attracting deposit flows? And do you think that capability has changed compared to the pre-COVID world, let's say, that was characterized by lower rates compared to what rates are expected to be in the coming years. So this is the first question. And second question is on OpEx. This quarter, they came in a little bit higher than expected. I was wondering what's going on there? If you can give us an update on the marketing costs and how much you want to spend on this front in the second half? And in general, over the next year years, do you think Fineco needs more marketing expenses to keep up with the revenue growth compared to what you spent in the previous years?

[Alessandro Foti, executive]

Regarding the cash sorting, the cash sorting is evidently clearly decelerating because -- and this is happening in a context characterized by rates that are remaining high. And the reason as we explained also in the past, is driven by technical reasons because the clients that have contributed for more than 100% of the cash sorting they are reaching their floor. So they are at a level in terms of percentage of liquidity below which is a really [indiscernible]. It's then going forward, if the market is rising, expecting a progress in the final rates, we -- it's not difficult to expect and not just an additional slowing down the cash sorting process but a reverse. And so the bank is going to return to a much -- to the normal condition. So the normal conditions are characterized by the bank is characterized by a capability of attracting a new liquidity that is pretty high because if you look throughout our presentation, you can see that we are continuously increasing the liquidity entering in the bank through the credit of salary and pensions. The bank transfer by the other banks is keeping on accelerating. And this is driven by the continuous growth of the market shares, the acquisition of new clients. And so yes, structurally, as much as we have the investment process by clients returning to a normal level, yes, the bank is going to start on generating a trend of growing deposits. So to say exactly at which level, it depends also by the level of rates. But we think that is going to be something that is -- so in the past we had -- so because if you look to the past, you have to exclude the final stage in which we had the negative rates in which there has been a clearly overflow liquidity. But if you go back a little bit in the past, in a period of time which rates they were not exactly negative but not particularly high. In my opinion, you can have an idea of the path that you can expect in terms of growth of deposits. But yes, we think that unless the market is massively wrong in terms of what is expecting in terms of rates. So the market is right, yes, we expect that the growth of deposits resuming going forward. And on the OpEx a bit higher, yes, but we are talking about a really small amount. So it's -- we think that, we confirm that OpEx are going to be aligned with the guidance going throughout the year-end. And regarding the marketing, on the marketing, we -- our approach is extremely simple. So every time that there is the opportunity to invest efficiently and effectively in marketing, we are going to do that because Fineco is a growth story. And every time that there is an opportunity we are going to capture these opportunities. So it's -- and so this is more or less in -- also in the past, we have been behaving this way. So clearly, if there are not the right market conditions, we're not going to spend. So we are going to take -- we're going to be extremely tactical by this point of view. So this is a period of time that is a period of time favorable, that is favorable for investing in marketing because the markets are quiet, everything is relaxed and so it makes sense to invest in marketing.

[Operator]

The next question is from Luigi De Bellis, Equita.

[Luigi De Bellis, analyst]

Two questions for me. The first one is on FAM. We're looking at [indiscernible] is continuing to increase. So how do you see the penetration in volumes for FAM evolving over the next 6, 12 months? And in the medium term, what is the target achievable in your view? And the second question on recruitment. Can you provide us an update on your recruitment activity and competition that you are observing on the market now?

[Alessandro Foti, executive]

Regarding the FAM penetration, as we are continuous, we are repeating, Fineco is going to remain an open platform. We are not going in direction of closing down the platform because for a very simple reason, if you want to cultivate your ambition to grow big in the -- particularly in the upper end of the market, you have to keep on running an open architecture. So this is going to be the case. At the same time, FAM, we expect FAM that is going to remain extremely successful in bringing to the market absolutely up-to-date and perfectly perfect solutions. And so we think that going forward on the medium run, probably within the next 4 or 5 years to have FAM reaching a penetration of our assets under management in the region of 50% can make sense. So this is -- and we think that it's probably an extremely blasted approach because on one hand this is going to bring an absolutely great contributions in terms of control of the value chain but at the same time it's going to make Fineco an absolutely winning player in capturing the, for example, the upper end of the market, leveraging on an open platform. On recruitment, we have not changed our strategy. So for us, recruiting is not a -- the main rationale is not for accelerating on the net sales because we don't need to do that because our growth is remaining mostly driven by -- is organically driven. For us, recruiting is important for keeping on improving the quality of the network, and it's important for guaranteeing a future to our company, avoiding, for example, the aging of the network. And third, also with our goal is to increase the productivity of the network. So these are the -- and then for these reasons, the most part of the new financial planners joining the bank as represented by people moving from traditional banks, bankers have decided to become agents. And then we have the young people, we are hiring and preparing for the future. Fineco has the lowest average age among the network of financial planners. And we think that the hedging of the industry is one of the biggest challenge that there is on the table. And as usual, we are not taking part to the frenzy, to the game of overpaying financial planners in order to get them on board because we -- what we are observing that we have some players that they are going back to these old practices -- and -- but we are not interested in competing on that arena because the past has showed very clearly that the strategy is based on being aggressive and overpaying financial planners for making them joining you is not boding well for the future development because it's going to attract financial planners with wrong motivations usually characterized by a low level of productivity. And so this is not the right strategy.

[Operator]

The next question is from Adele Palama, UBS.

[Adele Palama, analyst]

I have a question on Basel IV. If you can give a guidance on the impact that you're expecting for next year. Then if you can give us an update on the NII sensitivity to 100 basis point to change your rate? And then if you can tell us the contribution from the sales of certificates.

[Alessandro Foti, executive]

On the Basel IV, for us, the impact is not -- we cannot consider this as a significant considering the incredibly high level of CET1 ratio. So it's not a material issue for a bank like we are. So Basel IV is a point of attention for traditional bank, not for us [indiscernible]. And sensitivity has not changed. I'm looking to --

[Lorena Pelliciari, executive]

EUR 120 million.

[Alessandro Foti, executive]

Yes, it is remaining in the region of EUR 120 million, and the contribution to net sales from certificate is, for the moment, pretty small.

[Operator]

[Operator Instructions] The next question is a follow up from Enrico Bolzoni, JPMorgan.

[Enrico Bolzoni, analyst]

Sorry, just a quick follow-up. Given that you're expanding also in brokerage only with the new platform, does this change at all your view in terms of international expansion? In other terms, have you considered maybe expanding in other geographies also inorganically now that you offer brokerage-only services, which tends to appeal a broader audience internationally as well?

[Alessandro Foti, executive]

We are starting and planning a possible expansion abroad. Clearly the brokerage platform is going to be, in the case we decided to proceed in that direction, the brokerage platform is going to be one of the cornerstones of the strategy. No, we are not planning everything that in the case we decide to move in that direction is at the moment is just purely organically driven. We are not planning anything that is not organic.

[Operator]

The next question is from Elena Perini, Intesa Sanpaolo.

[Elena Perini, analyst]

Yes. Well, you were talking about your strong capital position. So in the last conference call you told us that by year-end you would like to communicate the technicalities to give back to shareholders part of the excess capital. I was wondering if there are many progresses in this respect? Or you talked about potential higher dividend or share buyback, if you have made any choices about the final outcome.

[Alessandro Foti, executive]

No, we don't have any brand new news to bring on this point. And between higher dividends or share buyback, we think that the preference is more in direction of the share buyback than increasing total margin.

[Operator]

[Operator Instructions] Mr. Foti, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

[Alessandro Foti, executive]

Thank you very much for your very interesting questions. As usual, we are available for answering to your further questions and deep diving in some other -- in the numbers and the concept. So thank you again, and talk to you soon.

[Operator]

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