FinecoBank Banca Fineco SpA

MIL:FBK

Earnings Call Transcript 2021-Q3

[Operator]

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the FinecoBank's Third Quarter 2021 Results Conference Call. [Operator Instructions]

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

[Alessandro Foti, executive]

Good afternoon.

[Operator]

Mr. Foti, we cannot hear you. Okay, we can. Please go ahead.

[Alessandro Foti, executive]

Good afternoon, everyone, and thank you for joining our third quarter results conference call. Before we start going through the details of the presentation, let me please underline that the last quarter once again confirmed our new dimension of structural growth. We are progressively delivering on our 2 strategic discontinuities in order to become more a platform fulfilling the financial needs of our clients and the bank.

First, we are carrying on our initiatives that already are keeping under control the growth of our balance sheet, which will in turn progressively increase and improve our revenue mix, boosting fees and commissions. Second, Fineco Asset Management is already delivering in its strategic discontinuity and is taking more control on the value chain to further accelerate our investing revenues and margins. The strategic discontinuities are making Fineco more and more a fast-growing and capital-light business model with a structurally higher profitability, thanks to the jump of investing revenues and a structurally higher room for -- to dispose of it. This will allow us to distribute an higher level of dividends, and at the same time, to be in the position to invest more for our growth. Let me please add that already now with our initiatives that are not yet at full speed, our balance sheet growth is comfortably under control and our leverage ratio is not more a point of attention.

Coming back to our results in the first 9 months of this year, in the period, we recorded a record high net profit reaching EUR 257 million and increasing by 4% year-on-year despite the increased contribution to systemic charges. This result is even more valuable considering that it has been achieved in a new normal world and beats the previous record set in the first 9 months of 2020. Revenues stood at EUR 597 million, increasing by 4% year-on-year, excluding non-recurring items of 2020 and mainly supported by the growth of investing, thanks to the growth in Asset Under Management and the operational efficiency by Fineco Asset Management. Brokerage confirmed a structurally higher floor also in an environment characterized by a much lower volatility compared to the 2020.

Operating costs were well under control, and the cost/income ratio stood at [ 31.4% ] confirming operating leverage as the key strength of the bank. Our capital position confirmed to be strong and safe with a common equity Tier 1 ratio at 18.4%. Let me please remind that after Fineco received the MREL requirements by Bank of Italy, we have successfully issued an EUR 500 million senior preferred, allowing us to be already compliant with a fully-loaded leverage ratio exposure requirement with 2 years in advance. Also our commercial activity continued to strengthen compared to the impressive growth experienced in 2020. After the record net sales registered in the first 9 months, figures for the month of October are around EUR 900 million, increasing by 22% year-on-year. The mix continued to be strong with about EUR 500 million in Asset Under Management, more than 3x higher year-on-year.

Brokerage revenues are estimated for October at around EUR 16 million. This is a very good news considering the unfavorable market conditions due to low volatility, which was below the average level of 2017-2019. Nevertheless, revenues are around 42% higher compared to the average monthly revenues in the same period, confirming once again that the floor of the business is now definitely higher.

Let's now move to the Slide 5. As announced, we reached very strong industrial results also in a new normal world, with adjusted net profit standing at EUR 257.2 million in the first 9 months, plus 4.4% year-on-year on a like-for-like basis despite the higher contribution of -- for systemic charges. Revenues stood at EUR 596.9 million, up 4.1% 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. Operating costs stood at EUR 187.6 million, increasing by 5.2% year-on-year, excluding costs strictly related to the growth of the business. Cost/income confirmed to be very low at 31.4%, despite the continuous expansion in assets and clients, thanks to our strong operating leverage and to the scalability of our platform.

Let's now move to the Slide 6 and start to analyze more in detail the dynamics of our results. In this slide, we show our net financial income amounting to EUR 217 million and remaining flat in the first 9 months of the -- for this year -- of the year. Net interest income stood at EUR 186 million, despite the worsening of the interest rates environment and profit from treasury management stood at EUR 31 million.

Let's now move to Slide 7. Fees and commissions stood at EUR 324.4 million in the first 9 months of 2021, growing by 13.1% year-on-year, mainly thanks to the positive contribution of investing. Brokerage, net commissions and trading profits confirmed once again a floor structurally higher compared to the past, despite the unfavorable market conditions in terms of volatility compared to the -- both to the first 9 months of 2020 and the second quarter of 2021.

Let's jump to Slide 26 to deep dive on our brokerage business. Brokerage confirmed once again that the floor of the business is structurally higher compared to the past regardless to the level of volatility. As you can see in the chart on the top of the slide in the third quarter of 2021, brokerage revenues reached EUR 45.9 million in a period characterized by low volatility, also due to seasonality, resulting nevertheless in a monthly average 36% higher compared to the monthly average revenues in the period of 2017-2019. In October, estimated brokerage revenues were equal to EUR 16 million, around 42% higher compared to the average monthly revenues in the period 2016-2019, and with the volatility that was lower than the average volatility of the same period.

Let me remind you that the growth of the brokerage business is driven by the contribution of 3 structural components. First, the deep reshape of our brokerage business. In this regard, we are now live with our leveraged certificates platform and we are starting the marketing campaign. As a reminder, our offer will be listed on the Hi-MTF, the alternative venue of which we recently took a 20% stake. This allowing us to extract value from the vertical integration of the business as we are issuer, market-maker and distributor. Let me also remind you that in the first half of 2022, we'll be live with a brand new brokerage platform, which will combine our state-of-the-art standard with top quality easy-to-use.

Second, the client base using our platform is widening with active investor that have grown significantly in absolute terms, standing around 35% above the average level of 2018-2019. Please note that our active investor have an average of 4 executed orders per month, our wealthy people in their 40s/50s with assets on average above EUR 200,000, and the vast majority of them is in relationship with our financial advisers for their long-term planning and their financial wealth.

Let me please add that in order to further position Fineco for its long-term growth and build up on its sticky and high quality client base, starting from January 2020 -- 2022, we will propose the most competitive offer in Italy to catch the next generation of active investor. We propose a very aggressive pricing for our investing and brokerage platform, giving them access to the global markets through shares, bonds, ETFs and mutual funds also through accumulation plan. Third, we are continuously increasing our retail market share.

Let's now move to the Slide 8 for a focus on investing. Let me remind you that over the last few months, we have experienced an strong acceleration towards Asset Under Management, as we have been able to catch the structural trends in place in Italy. We are already seeing the first contribution coming from the strategic discontinuity in Fineco Asset Management, which is allowing us to improve the efficiency of the value chain and generate higher revenues and margins. Investing revenues amounted to EUR 193.6 million in the first 9 months of 2021, increasing by 25.1% year-on-year, thanks to volume effect and strong net sales into Asset Under Management driven by a higher contribution by Fineco Asset Management. More in detail, management fees increased by 27.6% year-on-year in the first 9 months of this year, while in the third quarter of 2021 increased by 32.4% year-on-year and by 8.4% quarter-on-quarter. Let me please highlight that the management fees margins after-tax are increased to 47 basis points.

Let's now move on Slide 9 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. Let me please underline that the first 9 months of this year were characterized by costs directly related to the strong acceleration of our growth dynamics in the new normal world. On top of this, the yearly comparison is affected by the strict lockdown in the first 9 months of 2020, driving other administrative expenses below the average level of period 2010 and 2019. Operating costs in the first 9 months of 2021 stood at EUR 187.6 million, growing by 5.2% year-on-year, excluding costs related to the growth of the business, mainly additional EUR 2.7 million costs for Fineco Asset Management and they are current with the acceleration of the strategic discontinuity to further expand its business allowing us to have a higher control of the investing value chain, additional EUR 0.6 million in marketing costs in U.K. Staff expenses stood at EUR 80.3 million in the period, increasing by 5.9% on a yearly basis, net of the costs related to the expansion of the business of Fineco Asset Management. Finally, non-HR costs stood at EUR 107.3 million, growing by 4.9% year-on-year.

Let's now move on Slide 12 for a focus on capital ratios. Fineco is confirming a rock-solid capital position on the wave of a safe balance sheet. Let me please remind that the shareholder meeting convened on October 2000 -- on October '21, 2021, has approved the distribution of -- distribution for 2019 and 2020 of a dividend equal to EUR 0.53, which will be paid out on November 24, 2021. Common equity Tier 1 ratio stood at 18.37%, including the 2019-2020 dividend payment. Leverage ratio stood at 4.04%, including the dividend payment in line with the optionality allowed by ECB and Bank of Italy, our leverage ratio, excluding the exposure towards the Central Bank -- Central Banks is equal to 3.80%. Risk-weighted assets stood at EUR 4.580 billion, and the total capital ratio stood at 29.29% as of September 2021, including the dividend payments.

Let's now move on the Slide 13 for a brief comment on our MREL requirements and senior preferred issuance. As you know, at the end of August, Fineco announced the MREL requirements received by Bank of Italy, which will be binding starting from January the 1st 2024. The risk-weighted assets, MREL requirement is set at 20.83% and already consistently met by Fineco with own -- with own funds. The leverage ratio exposure requirement is set at 5.18% with an intermediate target at 4.11% binding from January the 1st, 2022. Let me please underline that our MREL requirements are the lowest disclosed in the European market, thanks to our diversified and low risk business model together with our high level of liquid assets.

As you know, differently from the leverage ratio, which is calculated only based on CET1 capital and AT1, the MREL leverage ratio exposure also includes other eligible liabilities, in our case, such eligible liabilities as senior debt, because the regulators has not asked us to issue any subordinated instruments. This in order to be immediately compliant with the fully-loaded requirements on leverage ratio exposure with 2 years in advance on October 14, 2021, the bank successfully issued EUR 500 million senior preferred with a very negligible impact on our P&L.

Let's now move on Slide 15. As you know, 2020 has made it even clear that Fineco is in the sweet spot for growth. And in the first 9 months of 2021, the bank has been able to deliver even stronger net sales, reaching EUR 7.9 billion with a very strong asset mix. October net sales were only the latest confirmation of this big jump in the new dimension of growth. Let me now spend a few words on the recruiting. As you can see on Slide 16, starting from last year, we have experienced a strong increase in the interest of financial advisers to join our bank, thanks to our business model, which proved to be the best position to grow in the new landscape, also thanks to our unique fintech DNA. To this regard, please note that we have no need to overpay financial advisers with huge upfront fees and use the aggressive approach historically taken by the industry. As a matter of fact, in the new environment, Fineco emerged more clearly as the perfect bank for professional -- professionals looking to grow in their whole business in a sustainable way. These dynamics were confirmed in the first 9 months of the year, resulting in a net increase of 146 Personal Financial Advisers in our network as we recruited 88 and 119 junior with net sales generated organically by the bank at 86% in the period.

Let's now skip to Slide 21. In this slide, we summarize our guidance, which are all confirmed with some improvements related to banking fees and investing revenues. With regards to our banking revenues, we expect our net financial income to stabilize, to remain stable in 2021 and 2022 at the level of -- levels of 2020. Overall, banking fees are now expected above EUR 45 million in 2021 and to grow going forward, thanks to the increase of our client base and to repricing actions. We're investing given the strong growth experienced over the last few months, driven both by the acceleration in underlying trends and by the first effects of the strategic discontinuity in FAM. We are again increasing our 2021 guidance to revenues growing around 25% with higher margins compared to 2020. Going forward, we confirm the guidance of around EUR 6 billion per year in Asset Under Management net sales and EUR 6 billion per year retail net sales by Fineco Asset Management. We also confirm the increase of the bank's management fees margins after-tax up to around 55 basis points and pre-tax margins up to around 75 basis points by 2024.

Brokerage revenues are expected to remain strong with a floor in relative terms with respect to the volatility that is definitely higher than in the past. Operating costs are expected to grow around 5% year-on-year. Please note that we're -- we expect about EUR 5 million of additional costs year-on-year related to Fineco Asset Management, of which EUR 2.5 million in the -- between EUR 2 million and EUR 2.5 million in the fourth quarter of 2021, as we are introducing the strategic discontinuity to improve the efficiency of the investing value chain.

Going forward, we expect an stabilization in running cost growth compared to 2021 around 5% year-on-year, not including the additional costs related to the expansion abroad and to Fineco Asset Management. On Fineco Asset Management, let me underline that in 2022, we expect around EUR 6 million additional costs related to the strategic discontinuity. 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, this excluding costs related to our expansion abroad.

Systemic charges for 2021 are confirmed at around EUR 38 million, which we already booked in the first 9 months of 2021 within provisions for risk and charges. Please note that more -- the more we will be effective in the deleveraging of the balance sheet, the more we can decrease the contribution of systemic charges. Tax rate for 2021, we expect it stable year-on-year, we -- while going forward, we expect an reduction of around 1 percentage point per year. On our capital ratio, we expect core Tier 1 ratio to remain above the floor of [ 17% ] and leverage ratio comfortably in a range between 3.5% and 4%, currently with a combination of both strong acceleration in the growth of the bank and the distribution of generous dividends.

As you can see in the Slide 55 in the annex of our presentation, the point of attention related to the leverage ratio has been definitely fixed. On dividend per share, going forward, we expect it constantly increasing, also thanks to the progressive delivery on our strategic discontinuities. Cost of risk was equal to 7 basis points in the third quarter 2021, thanks to the quality of our lending portfolio that is offered exclusively to our loyal customer base. For 2021, we expect it below 10 basis points, and in 2022 in a range between 10 basis points and 15 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 the whole new initiatives we are undertaking.

Let's now move to Slide 22. As you know, we have entered a new dimension of growth and to take full advantage from it, we have undertaken a wide set of initiatives to keep the growth of our balance sheet under control. This will improve our revenues mix and evolve our business model to be more fee and commissions -- and commission driven, becoming more a platform to fulfill clients' financial needs and the bank. Let me please underline that already now with our initiatives not yet at full speed, at the same time, we can sustain our strong long-term growth, distribute an higher level of dividends per share and comfortably remain well above our regulatory requirements.

Let me now go briefly through the new initiatives. First, we change the incentive scheme of our network of financial planners that is now wholly linked to net sales in Asset Under Management. This has produced an strong acceleration in improving the quality of our net sales mix. Second, we will further increase the productivity of the network through new software developments leveraging on our deep internal IT know-how. Third, also thanks to Fineco Asset Management efficiency and strong time to market. We can count on a wider product range in order to fully catch the whole spectrum of clients' financial needs and effectively convert their excess liquidity. For example, our FAM target offer fits virtually all investment needs, while the platform of third-party savings account which is already life is perfect for clients with no intention to invest in managed products.

Finally, we are improving the quality of our client base, focusing our target marketing on the upper end, also thanks to the repricing of our banking services in order to better control the acceleration of new clients from traditional banks and to be more selective in our client acquisition. All these set of new initiatives will allow us to be more selective in the growth and we are pursuing it, reflect -- resulting in a better quality revenue mix.

Let's now move to Slide 23 to deep dive on our banking business. As you know, we have set a number of industrial initiatives to manage liquidity, improve the quality of our client base and total financial asset mix, and in the second -- and in the end, deleverage our balance sheet. Among this, it is worth mentioning the more dynamic management of our treasury, the increase in the appetite for lending by our clients with no change to our cautious and conservative approach, the new platform to distribute third-parties savings account, the new pricing of our banking services, finally, the new platform to manage the tax credits towards the state under the Ecobonus and Superbonus, which we are progressively buying. This will help us to sustain the net interest income with an interesting yield and not use of capital as the counterparty of credit is the state.

At this regard, the results of the first 9 months already show the first contribution coming from the tax credits, and going forward, we have a volume potential in a range between EUR 1.5 billion and EUR 2 billion. At the end of September, we bought around EUR 400 million tax credit, which we expect around EUR 800 million by the end of 2021.

Let's now move on Slide 24 for a deep dive on our investing business. As anticipated, going forward, we expect an acceleration of our investing revenues and margins. This is due to a further increase in our network productivity leading to growing volumes and to the strategic discontinuity in Fineco Asset Management, which will extract additional operational efficiency and allow us to take more control of the investing value chain. In this slide, we summarize our actions to further improve both the volume effect and Fineco Asset Management contribution. Our initiatives are already delivering, as you can see from our record Asset Under Management net sales and by the strong retail net sales by Fineco Asset Management. In particular, in Slide 25, you can appreciate how Fineco Asset Management is gaining commercial traction and increasingly contributing to the Group net sales with retail net sales doubled year-on-year.

On top of this, you can also see the acceleration in the internalization of the value chain showed by the increase in the institutional classes. Let me remind you that the discontinuity in Fineco Asset Management will allow our Irish company to progressively and structurally decrease the cost of third-parties through a number of initiatives, like for example, the launch of the new flagship product range fully managed in-house, new advisory services or lower cost of mandates.

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

[Paolo Grazia, executive]

Thank you, Alessandro, and good afternoon everyone. First 9 months results confirmed once again that our one-stop solution offer in the U.K. is providing to be very well welcomed and our marketing campaigns providing a strong boost to quality client acquisition. New current accounts in the period has been almost 70% higher compared to the whole 2020, and we are now developing a brand new proprietary model to maximize the efficiency of our marketing campaign based on volatility and clients' behaviors. The acceleration of our customer acquisition dynamics and the quality of our client base has been confirmed in the last few months.

For example, as you can see on the second graph on the left-hand side of the slide, the penetration of active clients on brokerage is confirmed to be strong at around 70% on the new current accounts in the first 9 months of 2021 confirming that we are now -- we're not attracting hit and run highly speculative and volatile customers, but we are attracting experienced traders, lawyer and looking for quality offer, the further evidence of the right position chosen by the bank in the U.K. This translates in a further boost of our revenue generation. On the right-hand side of the slide, you can see revenues in the first 9 months of the year being higher compared to the whole 2020. On top of this, our cross-selling is working very well and we are continuing to improve our revenues mix in favor of over-the-counter listed products, which are now the lion's share of the growth.

In the Slide 30, with some of the next steps that are getting us closer to the full launch of our investing offer, in particular, we are now improving our ISA offer with multi-currency and focusing on the user experience by building up easy-to-use journeys and maps to help clients choose the best investment solution based on their goals. As a final note, as Alessandro already described, the 2 strategic discontinuities on the leverage and on the investing will allow us to further increase our growth plan abroad. And to this regard -- this regard, we are now planning a more robust marketing in the U.K. for 2022 with our usual gradual path, while we are preparing the setup to launch our offering in Germany also by the first half of 2022, as we think that our model are just based on the features of the German market can be very attractive for local German clients.

Now -- thank you for your attention now, and I will hand it back to Alessandro.

[Alessandro Foti, executive]

Thank you. And thank you for your time. Now we can open the call to questions.

[Operator]

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

[Domenico Santoro, analyst]

First of all, on the investing fees, I mean, your guidance for this year, which is around 25, suggests that the Q4 is going to be flattish vis-a-vis the third quarter. So I was just wondering whether there is any catch-up in terms of expenses to FAs, the usual seasonality that we see in the last quarter of the year, then there was quite an improvement of margins in the quarter. So I was just wondering how much this is due to your initiatives at FAM and how much was instead of -- mix effect? So at this point, whether the -- you see any upside risk to this 75 bps that you have as a medium-term target on AUM?

The other question is, again, on the expenses to FAs, given all the initiatives that you have in place in order to accelerate sales and how shall we model this going forward, do you see an increase, how the 2 things, sales and the payout to FAs relate in a way? Then just a quick question on banking fees. This year, ex the one-off last year, they grew by EUR 5 million. I wonder whether this is the run rate that we should include in our model in terms of increase? And then on the -- new rules regarding the Patent Box, I wonder whether you will apply and what that means in terms of your future tax rate is, any changes?

[Alessandro Foti, executive]

So regarding the investing fees guidance, clearly, we -- as you probably are familiar, all throughout this year we have been always -- we prefer to be conservative in the guidance on going through this year and progressively raising the guidance currently with the evidence, the big jump was stable. So clearly, at the moment, the momentum is extremely strong, and so clearly, we can -- there is clearly a seasonality in the first quarter that is related to the payments of the incentive scheme of the financial planners.

But at the same time, clearly, there is -- if the run rate of the business is going to continue stronger than we were expecting, clearly, there is room for also having some positive surprise. But again, we are remaining consistent with the approach we used all the year long. So progressively, when we were sure that everything was extremely rock-solid, we increase the margins -- we increase the guidance. So at the moment, this is something -- it's like the same approach used by when there are other states say come on, the expected growth -- the growth of domestic product is this, this is what is in the pocket considering the situation, but clearly, the momentum is extremely strong. If we don't have any unexpected surprise by the market, clearly, we think that probably there is also room for doing even better. The increase of margins in the third Q in the -- is clearly is a combination of mostly is driven by the big impact -- the beginning of the impact of the Fineco Asset Management discontinuity, and the mix clearly is continuously improving slowly, but steadily is improving.

Just think to our decumulation products that are continuously increasing the equity exposure of clients. And it's a little bit too early to say to just to give you an idea if there is of not an upside risk regarding the 75 basis points, 2024. At the moment, we prefer to remain -- that we gave the guidance to the market just a few months ago, we prefer to remain consistent with this guidance. Regarding expenses related to financial planners, it's clear that the higher had the results and clearly, and the higher you have to expect the bonds we are going to pay to them, this is a matter of fact. But the incentive scheme is built in a way that clearly is not linear, the progression. Clearly, the more if we have an higher-than-expected level of results, the increase we are going to have an increase in the incentive for financial planners, but it's going to be in a much smaller scale respect.

So regarding the increase of the more -- the higher-than-expected results. So in a few words, if we have an much higher results, clearly, we are going to be very happy to pay to our financial planner higher incentive schemes, because at the same time, what we are going to pocket is going to be massively higher. So it's -- and on the banking fees increase of EUR 5 million year-on-year, to your question if this can be considered as the run rate, the bank is growing incredibly fast, and also what has taken us by surprise has been the fact that we, that despite the introduction of 2 waves of repricing, our expectation was for an increase of the quality of the clients, but probably from at least a modest deceleration in the client acquisition deals, and what we are experiencing is exactly the opposite. So the quality of clients is going up, but also the client acquisition is going incredibly well. And for this reason, we -- at the moment, is not on the table, but we cannot rule out to introduce additional repricing on the -- for the new clients, considering that in relative terms, the gap, if we are considering the customer experience we are providing to clients, our respect, traditional banks is keeping on widening. So I think that it's a little bit to give an guidance of EUR 5 million as a run rate, I think it's like to have an static picture, but everything is moving incredibly fast and is moving definitely in our favor. On the Patent Box, I'm leaving the floor to our CFO to give you a little bit more -- some more visibility on what's going on there?

[Lorena Pelliciari, executive]

Thank you, Alessandro. Good afternoon to everybody. So regarding the new Patent Box regime introduced by the Decree in October 2021, it's necessary to wait for more details by Italian tax authorities in order to evaluate the impact for the bank. The high level of uncertainty already existing on the research and development tax credit led us to consider the old regime more convenient for us. We have already applied for the renewal of the regime related to the software for the period 2020-2024, and as prescribed by law, the tax authority has now to officially validate the use of the same methodology that we agreed for the previous pre -- period and previous period was 2015-2019. At the moment and with reference to the period 2020-2024, we maintain the option for the old regime as tax authority has already accepted our renewal. And the Patent Box estimate contribution for 2021 is in line with 2020 and is around EUR 4 million, considering the same methodology agreed with tax authority for the previous period 2015-2019.

[Alessandro Foti, executive]

So Lorena, practically, we can say that up to 2024, there is we don't expect -- we -- the market does not expect any significant change in terms of impact of the Patent Box.

[Lorena Pelliciari, executive]

For Fineco.

[Alessandro Foti, executive]

And -- yes, for Fineco, yes.

[Operator]

The next question is from Azzurra Guelfi with Citi.

[Azzurra Guelfi, analyst]

A couple of questions for me. You have provided us a very detailed outlook, but the only one that I don't see is the net profit. So looking at the various movement with the strong investing, the banking stabilizing and a bit of higher costs from the inflation and the growth, is it fair to say that over the next couple of years, your net profit growth could be around mid-teens level, and if you can elaborate a little bit of that?

The second one is on the AUM flows that you target for next year, you talk about net sales of around EUR 6 billion. This is the level that you've already achieved in the first 10 months of this year. So I wanted to know if you can give us a little bit more color on what are the assumptions that you have made to get to this EUR 6 billion, and if there is any potential for higher results next year if the conditions remain solid as they are? And if I can, a very quick thing, on your brokerage side, you would not have any impact from the ban on the payment for order flows that has been announced today, right?

[Alessandro Foti, executive]

So regarding the net -- clearly, we are not giving an precise guidance on net profit, because I think that considering the level of extremely precise details we provided in terms of -- in terms of volumes and evolution of cost margins on investing and so on, clearly, it's, we think that there is -- I think that it's not -- it's possible to model what you can expect. Clearly, the increase in terms of profitability is going to be clearly progressively quite large. And so we think that clearly to think a growth and a growth of the net profits that is going to be consistently double-digits going through the periods. We think that, in my opinion, makes a lot of sense that this is clearly is what is emerging clearly if you put together all the informations we are giving to you.

And regarding Asset Under Management net sales, it's, we are clearly giving guidance. We -- on the EUR 6 billion guidance on Asset Under Management, by definition, we have to be -- I'm not saying a little bit conservative because we don't have the crystal ball, and so we cannot -- we don't know what we can expect going forward. But if your point is, if we have market conditions remaining extremely favorable as they are now, there is clearly an -- a potential upside, yes.

And regarding the third point, the impact from the ban on payments for order, and for everybody that is familiar with our brokerage business, Fineco is not running an business model based on payments for the order flow, that our trading profit is 100% driven by our internalization of the flows. So that means that thanks to the dimension of volumes we have and the quality of volumes, they are extremely granular, we are able to match the clients' orders directly. And without sending them to market and keeping for us the spread and providing and guaranteeing our clients the best execution in terms of both pricing and insights. So clearly, it's absolutely an -- a market practice that never has been part of our business model. We don't need to do that because we are in the privileged position that probably we are -- probably in terms of capability of internalizing order flows, we are by far the best position in the European player.

[Operator]

The next question is from Giovanni Razzoli with Deutsche Bank.

[Giovanni Razzoli, analyst]

A couple of questions from my side. As far as the increase in the risk appetite by clients that you have mentioned, which has driven the increase in the fees. Can you share with us what the exposure to equity, if you can give us an indication of what -- how can we judge this increase of risk appetite? And I was wondering whether you can also give us an indication of what is the backlog of potential money in the decumulation products that going forward maybe invested into higher asset classes and whether this is going to also drive an increase in the management fee going forward?

Second question related to the third-party savings accounts, I was wondering whether you can share with us what are the volumes there? I mean, the offer has started quite recently, but I think that the ramp-up is quite significant. So if you can give us the figure then? The last point, I may have missed the comment, but do you still plan to expand abroad, Europe, and so if so, whether your guidance on the cost base, 5% growth in the long-term already captured this?

[Alessandro Foti, executive]

Regarding the increase in risk appetite by clients, at the moment, we have an net exposure of our clients to equity is slightly above 40%. But I'm asking my colleagues to confirm this number. So...

[Lorena Pelliciari, executive]

Yes, I confirm, Alessandro, yes, 40.4% at the end of...

[Alessandro Foti, executive]

Yes. And we expect an slow, but steady continuous increase of this -- of the exposure to the equity markets driven by combination of an growing risk appetite by clients for the evident reason that is that if they want to protect their -- on the long-term, their wealth from the level of inflation, they have to look to the -- in any case, on the long run on the equity market.

Second, the decumulation product, so we jump direct in the second question, the decumulation products clearly are continuously automatically bringing a contribution in the increase of the exposure to the equity markets. At the moment, we -- which is the total amount of the decumulation products that we are -- that we serve to the clients, I don't know I'm asking to my colleagues because I don't remember exactly the -- exactly that number. We have to return to you later on, because I'm...

[Giovanni Razzoli, analyst]

Okay. Because if I remember correctly, you provided...

[Alessandro Foti, executive]

It's considered that is continuously is a moving picture because the decumulation product solutions are one of the flagship solutions we're providing to our clients. So every -- practically every month, there is a continuous increase of this solution. And so this -- the potential of this is continually -- is continuously building up. So we -- clearly, we can -- we are going to give you an -- we are going to give you an kind of an photo of -- which is the existing situation, but keep in mind that clearly, month by month, then you -- the amount of this solution we serve to clients is continuously to increase. And so this is probably is the most powerful driver in moving clients into an -- a more equity exposed asset allocation.

Plan -- the expansion in -- the expansion abroad, clearly, we confirm that is in our plan. The guidance on cost clearly is, we -- as Paolo has underlined before, we are going to keep an extremely rational and progressive approach. So clearly, the more we get the right kind of feedback by the market and the more we are going to put money on the table, the example is on U.K., U.K. now is clearly showing a good signal that we are moving in the right direction, and so probably we are going to put a little bit more money on the table.

But to give you an precise number, it's difficult, because it depends, for example, by market conditions. So in U.K., the largest part of the revenues generated by clients is related to brokerage. And brokerage is a business in which it was the case to push in terms of marketing if you have a decent market condition, so a decent level of volatility. For example, if you push too much in terms of market when the velocity is very low, the risk is to waste money. So it's difficult to give you an precise indication because we are going to be extremely -- as usual, extremely progressive. And for us, the main goal is to be very effective in what we're going to spend. And we are going to remain extremely efficient on the operational cost point of view.

[Operator]

The next question is from Gianluca Ferrari with Mediobanca.

[Gian Ferrari, analyst]

3 questions for me as well. The first one is on the guidance of net financial income for '21 and '22 in line with 2020. But I was wondering if you can give us the numbers without profits from treasury management, i.e. a number comparable with EUR 270.8 million of 2020 or in a different way, how much profits from treasury management you expect for full year '21 and full year '22?

The second question is on the 88 senior you recruited this year. If you can give us the average costs, i.e., if I recall, probably you are amortizing over 3 years, right? And if these 88 are just coming from the competition or you are also poaching people from banks, just a bit -- to have a bit of color about this? The final question is more strategic one. You talked a lot about optimizing the value chain. I was wondering if something around your life offer, you keep distributing products, multi-class products from Eurovita and Aviva. So I was wondering why you don't ask a life insurance license, and you don't take advantage from the fund offer, which is now very wide to build your own multi-class products?

[Alessandro Foti, executive]

So regarding the financial income, it's practically impossible to give you an precise split right now because it means that we have to make a kind of guess of what's going -- what is expected to going on, on interest rates, because the 2 components is kind of, are to communicate to parts that we are communicating together. So for example, so if we have an higher-than-expected rise in interest rates, you can expect clearly the component represented by the net interest income becoming higher than we were expecting at the beginning.

At the same time, the contribution of treasury management going down and exactly the opposite in the case, you have an kind of moving in the opposite direction. So what we can say that it's, there are 2 components, thanks to the fact that we built an extremely, extremely smoothed portfolio. So the portfolio has been built in a very progressive way. So we don't have any situation. So there is a continuously amount of bonds that they are running off year by year in a very smooth way. So this is giving an extremely linear, kind of linear approach that is making the linkage between the treasury management and the net interest income extremely -- working extremely well. So this is the reason why we are guiding on the financial income.

At the same time, clearly, the fact that we have perfectly now under control, the balance sheet is giving us clearly more room for maneuvering. So this is the reason why we are not in a position to give such a precise split between net interest -- net interest income and treasury management because it's a continuously moving situation. For example, 10 days ago when we had the big spike and -- the big spike on the interest rates, clearly, the new -- assuming that, that was to be considered the new scenario for 2022, the blend was more in direction of an higher-than-expected net interest income and lower than initially expected contribution by the treasury management. So this is -- but putting it together, considering that the portfolio is extremely very well balanced and distributed over the years, we are extremely relaxed in saying that we expect an stable financial income.

On the recruitments of the 88 senior financial planners, and before leaving the floor to the -- to Lorena, as usual for the costs, I'm asking -- the most part of them are coming from banks and not coming from other financial planners. The big trend there is the reason and probably the growing awareness among the skilled bankers working in traditional banks that we are moving incredibly faster in interconnection, a completely kind of different world, in which, if you went to keep on doing your job in a very efficient and effective way, you have to keep on working in a completely different environment that is going to free you from any constraints from an temporal and physical point of view. And so clearly they are looking more and more in direction to a player like Fineco that is characterized by an unmatched level of efficiency from the infrastructure point of view, at the same time, an extremely broad and fair proposition. So -- but regarding the costs, I don't know, Lorena, if you want to give to...

[Lorena Pelliciari, executive]

So unfortunately, we don't have the split for the 88 senior FCA -- FAs acquired in 2021. If you don't mind, we come -- we will come back with a precise answer on this point.

[Alessandro Foti, executive]

It is as usual, we are -- what we can confirm that we are remaining current with our approach that is to pay what is the -- what we think is something that is sustainable and fair. So we are not interested in entering in the game of overpaying the new bankers in order to get them on board because it never has been our strategy and clearly, no, we are not starting that now and we don't need that.

And regarding the life insurance, this is a good -- is a very good point you're raising, because at the moment, we think that in the insurance business, we are -- clearly, the production we have is quite large, because it's -- at the same time, we are still operating in a way that is we have not -- because at the moment, when you look to the large life insurance producer, you have in front of you typically 2 kind of players or you have players characterized by having their own internal factory and or you have players that they are -- that they have entered in a kind of a little bit longer-term and binding arrangements with insurance players.

Both of them -- both the 2 solutions, the advantage that they are providing to you higher margins. At the moment, we are in a kind of unique situation because we are an -- we are by far -- for sure a very large producer, but at the same time, we are not -- now we have an internal factory, and at the same time, we don't have any kind of little bit long-term agreement with the life insurance producer. So the results that clearly, our margins on the life insurance business, there is room for improving them, and clearly, we are -- probably we are going to start on thinking about that.

[Operator]

The next question is from Alberto Villa with Intermonte.

[Alberto Villa, analyst]

I have 3 questions. The first one is on the tax credit. You kept your target of EUR 1.52 billion in terms of potential for tax credit, the government now is pushing forward the expansion of the Ecobonus and so on. So I was wondering if -- given that you targeting to reach EUR 800 million by the end of this year, this guidance could be conservative or if you see there are caps that is difficult to go much beyond this figure? And the second one still on the...

[Alessandro Foti, executive]

Yes, excuse me, go ahead, go ahead.

[Alberto Villa, analyst]

And also if you can confirm the margins on the tax credit and the contribution we are expecting on the net interest margin for 2022 from this business?

[Alessandro Foti, executive]

On tax credit, at the moment, we don't think that we -- is the case to change the guidance, because clearly we are extremely -- we are extremely accurate and conservative in order to be sure that everything is done in the proper way. And so we -- and so it's an extremely complex and granular business and so we are not in a rush, we want to keep on doing that. And also, and this is related to the second question, monies on tax credit. It's clear that at the moment, we are in an environment that is characterized by an -- growing an higher supply than was expected before considering that clearly the possibility to get this bonus has been prolonged.

And second that we are in any case in an environment characterized by expectation of higher interest rates. And so clearly, we are -- we think that there are the possibility -- there are clearly evidence that we have the possibility to improve the conditions in our favor going forward. For this reason, we -- there is no reason to rush, because there is, we think an quite high probability that going forward is going to be possible to buy physical credits to more convenient conditions on -- for us than for the 2 reasons I'd explained, and then a higher supply that is flowing in the market. And second that clearly -- interest rates are clearly are higher than the beginning. And for this reason we -- we cannot rule out that the margins on this business can go higher going forward.

[Alberto Villa, analyst]

Okay. And the last 2 questions I have is one on the ISA product margins on a normalized basis, how we should think about the profitability of this product? And finally, a sort of curiosity, we have seen a bank which recently presented their targets for 2024, including the fact that the Single Resolution Fund will be abolished. So our thinking if you consider this is the scenario we are going to face and what would be the positive impact on your 2024 earnings point of view?

[Alessandro Foti, executive]

On ISA, I would say that we are talking about something that is just the beginning, in case, the margins on our ISA products are extremely are very, very low. So it's a product that is mostly current with the concept of giving to our clients a one-stop solution, but it's not expected to become an -- a large contributor in the revenues. Honestly speaking, I -- for me, it's a brand news is something that is completely brand news, because it's, I didn't know that there is an proposal for abolishing the Single Resolution Fund. I don't know, Lorena, did you hear something about that? For me, it's a complete surprise.

[Lorena Pelliciari, executive]

No, no, no. I think that it's a good idea, a good idea, a very good idea, but I don't...

[Alessandro Foti, executive]

If you want to get my personal point of view, it's -- probably it's a good idea, but exactly for this reason, I think that probably that is going to be -- we're going to go there is very, very low.

[Alberto Villa, analyst]

It should expire in 2023 that, that would be the mechanism, but we'll see.

[Operator]

The next question is from Elena Perini with Intesa SanPaolo.

[Elena Perini, analyst]

Yes. I've got a few questions. Well, actually, you are going abroad with your offer, while other banks like they are coming to Italy with digital offers. Do you see a fierce competition, and do you see it as a potential challenge for you? Then on recruitment costs, you mentioned that your Slide 16 stock of EUR 35.4 million to be amortized, can you remind us about the methodology of this amortization? And then it is not clear to me if we have to expect some one-off costs related to incentive scheme in the fourth quarter? Finally, on the dividend, you talked about growth in dividend, I was wondering what kind of base can we take, because the EUR 0.53 is accumulated amount 2019, 2020. So I don't know if to [ 26, 27 ] per year level referring to the past can be considered as a starting point?

[Alessandro Foti, executive]

Regarding the first question, the fact that we have an such large traditional European banks deciding of entering the Italian market through a digital offer and instead of considering of buying branches and so on, it's a great news, because it's -- clearly, it's pretty clear that when you have a bank like that, that is giving up completely on any strategy based on branches is clearly -- is pretty clear that now the world has completely changed in the direction that is our world. And considering the opportunity that is on the table is so huge, so large, so big, that honestly speaking, the last concern we have is to have someone else that is entering the market.

It's exactly the content, because the more you have established large banks, the traditional established banks that they are pushing in direction of an digital world. And this clearly is going to accelerate the process of making clear to everybody in the country that digital is the new world. And so probably this means that we -- that the pie is going to become much bigger than we were expecting. And so for us -- so these are absolutely a great news and I'm very pleased by this, because this is going to help in accelerating the process of transformation of the banking landscape. And clearly, considering that Fineco has still despite the huge success, the very fast growth, still, our market share is very small. And so clearly, we can have just benefits by such kind of a revolution. And regarding the recruitment cost methodology for amortization, I don't know, Lorena, if you want to elaborate on the point?

[Lorena Pelliciari, executive]

Yes. Thank you. So these costs are amortized in 5 years or 6 years, it depends on the contract that we made at the time in which we recruit each PFA. And this is the residual, and maybe there is 1 year, 2 years, 3 years and so on, because it's the residual today. But when we recruit a PFA, we start an amortization, the test duration of generally 5 years, the average is 5 years.

[Alessandro Foti, executive]

On the third question, no, we don't expect a one-off cost that you -- the incentives, I'm not sure that I got perfectly your point, because it's -- I don't know, Lorena, you want to again also on this point to elaborate the ways working the payments of the incentive scheme?

[Lorena Pelliciari, executive]

No, no, we don't expect one-off cost. Do you refer to the incentive scheme to PFAs?

[Elena Perini, analyst]

Yes.

[Alessandro Foti, executive]

Yes, I suppose, yes.

[Lorena Pelliciari, executive]

No, we don't expect one-off cost. We only have -- we expect to double more or less the costs that we have accounted, we have accrued in the third quarter.

[Alessandro Foti, executive]

It's clear that currently with the answer we gave to the previous question, if we have -- for example, if we have results, they are definitely very well above what we were expecting. Clearly, we can expect an higher cost on the incentive scheme, but we are going to be extremely pleased by this, because as I explained, the structure in a way that what we are going to be on the incentive scheme is going to be much, much lower than what we are going to get in terms of reverse by the extra performance by our financial planners. On the dividend, I clearly, there is -- I don't know, Lorena, if you want...

[Lorena Pelliciari, executive]

Yes, yes. So the 53 basis point -- EUR 0.53 -- sorry, the EUR 0.53, we are calculating, considering 70% payout in 2019 and 2020, retaining EUR 100,000...

[Alessandro Foti, executive]

EUR100 million -- no, EUR 100 million.

[Lorena Pelliciari, executive]

EUR100 million.

[Alessandro Foti, executive]

So clearly, the base in the EUR 100 million has been retained in terms as a kind of a conservative approach considering that we were operating in a little bit where we're selling a little bit uncharted water, but clearly, the base on which we made the calculation has been more or less in the region of 70% payout. But as we explained, we are not pleased, don't use this as we are not giving an guidance on the dividend payout, but for a very simple reason that Fineco is a fast-growing company, and to give an precise binding dividend payout guidance on a company like Fineco doesn't make any sense, because, clearly this make -- can make sense for someone that has a kind relatively stable and predictable pace of growth.

At Fineco, we expect our expectation that is going to be a company that is keeping on surprising in terms of what we are going to be able to achieve in terms of growth and so on. And so to give the market an precise guidance on the dividend payout that we don't think that -- and this is the reason why we are using the concept of a continuously growing earning per shares and growing dividend per shares. At the same time, if your question is, which base used for the calculation, we use an 70% payout base.

[Lorena Pelliciari, executive]

In 2021, so the base for considering the dividend -- the increased dividend per share is 2021. And in 2021, as we already said, we are assuming a dividend payout at 70%, retaining the EUR 32 million related to the fiscal realignment of goodwill, that we realized in the first half 2021.

[Operator]

The next question is from Angeliki Bairaktari with Autonomous Research.

[Angeliki Bairaktari, analyst]

You mentioned during the presentation that you're planning to launch a brokerage offer to customers under 30 years old in Italy, which is going to be more aggressive in terms of pricing and will also include 3 current accounts. Can you give us a bit more information on how this offer is going to work? And in particular, sort of what gives you confidence that there is not going to be any push-back from the existing clients or any sort of cannibalization with your existing client base also considering that if we look at your strategy over the past year, you are really repricing your current account upwards and you're trying to limit deposit growth, especially in Italy?

Second question, could you please give us an indication of the incremental revenue from leveraged certificates for 2022? And third question, we saw that deposit flows were quite strong in October. Are you -- have you been able to shift any deposits yet into the third-party savings platform, and what should we expect sort of for the rest of the year and 2022 as well in terms of deposit inflows?

[Alessandro Foti, executive]

Yes. Regarding the planning to launch a brokerage offer for clients under 30 years, so, first of all, is the strategy based on the concept of targeting a cluster of clients that is not a particularly large cluster of clients for us. Second is a cluster of clients that is starting on approaching the investing world. And so if your question is, if we expect any kind of push-back by the existing clients, clearly, the answer is no, there is absolutely no risk of cannibalization and so on, because, as I was saying in terms of contribution of the overall margins of the bank, the contribution of these cluster of clients on brokerage investing is very -- is incredibly low.

So it's a kind of -- is a strategy that the strategy is to start on investing on the clients of the future. So exactly the same we are doing with our financial planners network, because we had -- we recruited 88 senior, but then we had another more or less -- more than -- more or less 65 junior that clearly are going to be productive, really productive in a 5-year time horizon. So the rationale behind this is exactly the same. So it's -- there is a very clear evidence that the digitalization of the society, the growing awareness that we have to take care more seriously of your money is increasing the level of participation of the young clients.

Clearly, we are going to approach these cluster of clients in a way that is going to be current with extremely solid, sustainable and transparent approach we are using on all our base of clients. So we are not going to -- we're going to be very extremely focused on the target market. We are going to be extremely focused on the concept that the clients has to be aware of what they are doing. So we are not interested in approaching these clients with the same way that is -- they are approached by some high-flying brokers all around the world that they are -- and so clearly, we have no interest in approaching these clients with making a proposal that is closer to the concept of gaming than investing.

We are going to approach these clients in order to start on giving to them the opportunity to take part to the financial world to become good investors going forward. So this is the clearly the reason, absolutely no risk of -- it's perfectly current with the overall strategy, there is no risk of cannibalization, and clearly, there are absolutely no risk of any kind of push-back from the existing clients.

Regarding indication of incremental revenue from leveraged certificates in 2022, the business has just started. We started with the marketing right now. And we can confirm that we have to be patient. We are going to have -- we are going to need some months in order to start on getting traction on the business, but clearly, we remain convinced that there is a very sizable opportunity there considering that the market share we have on leveraged certificates is in terms of revenues generated by the business is a much, much smaller or expected natural market share we have in the brokerage business. So the room for extracting an quite interesting amount of revenues, we think -- I don't know, Paolo, if you want to add some more comments on this point.

[Paolo Grazia, executive]

Yes, basically, yes, we're just starting now to spend money on the product. We have good evidence in the first days. We basically created a brand new platform with brand new user experience both on the mobile and on the laptop, this increase, so it's -- I think it's going to be something interesting in the future, and you have to keep on advertising, but also keep on adding a new underlying, and I think it's going to be quite interesting, we'll see in the next few months.

[Alessandro Foti, executive]

And as usual, the approach is not going to be an product approach, but it's going to be a platform approach. So clearly, we are going to propose our clients a kind of an platform solution for the certificates where that is much more than just giving to the clients a single product. The biggest reason behind the Fineco success has been always the capability to keep to our clients and a great experience in terms of the way the clients are interacting with us, and the same is going to be done with the leveraged certificates. We're going to create an environment extremely easy-to-use, but extremely broad that is related to the leveraged certificates, making the experience for clients using leveraged certificates absolutely unique.

And on the deposit -- the strong deposits in October, clearly, when you are observing what's going on, on deposits, you have to be extremely -- you have to consider that there are -- there is seasonality, technical components, and so, for example, in October, there has been -- we added -- there's -- at the end of the month, there is the payments by clients of their utilities and considering that the end of the month was in the weekend, the payments of UTS has been postponed in November. And so clearly, this has produced an higher-than-expected increase of the deposits, but just for technical reason, and then we had also some activity on the brokerage platforms that has produced a little bit more of liquidity.

So we are absolutely, for example, November is going to be a month characterized by -- and also, we have to consider that usually declines when they have very important tax payments to make -- they tend to build up liquidity in advance. So November is the most important tax month in Italy. So -- and so clients are expected to pay a huge amount of tax during the month of November. So for this reason -- and so we think that -- on that numbers is clearly is related, we -- it's not in current with what we are doing.

On the deposits of -- third-party deposits, I don't know, Paolo, if you want to make -- because the business has been -- is up and running by particularly one month and a half. We have just one bank that is on the platform, and we expect over the last few months to add more banks and to give to clients an little bit more sophisticated solution. But I don't know, Paolo, if you want to elaborate on a little bit more on this platform?

[Paolo Grazia, executive]

Yes. Basically, we started with just the first one, now we are running the marketing campaign through the customer base eligible that we focus on this cluster. Of course, we don't offer these kind of the products to the old customer base. We just choose the one where we need to. We want them to decrease the liquidity on their account and is building up. Here also takes time because people, they have to be -- they have to know the products, they have to see the products on their website every day and eventually subscribe for the deposit. But in the next 6 months, we also add another 2 more providers with probably also more interesting interest rates we think. And yes, I think it's going to be to see some evidence from the results, we have to deploy the marketing campaign and also add the 2 provider I was talking about, probably in the next 6 months, we will see some good results of some of these.

[Alessandro Foti, executive]

So practically, so if your question is, is going to be on -- within the year-end and an important contributor in reducing the liquidity, the answer is not yet. But if your question, what you expect for 2022, the answer is yes. It's going to be an absolutely decent solution that is going to give an absolutely better interesting contribution in absorbing the liquidity that is not going to be -- is not advisable by the investing solutions.

[Angeliki Bairaktari, analyst]

If I may just follow-up on the offer on the younger cluster of customers in Italy, is there going to be a time limit on this offer, and is the expectation that over time and as these customers approach the average customer age at Fineco, which is closer to 50 years old, effectively, they will be paying higher fees of their current accounts or investing products, so they will have to see some price inflation over time as you might stay on the plan?

[Alessandro Foti, executive]

No, it's clear that at the moment, the -- this is a proposal that, if -- for example, if you started that you are 30 years today and next year, you're going to be 31 years old, at the moment, you are becoming 31 years old, you return to the old pricing. So clearly, it's -- so this is the scheme.

[Operator]

The next question is from Roberta De Luca with Goldman Sachs.

[Roberta De-Luca, analyst]

I would just like a bit more color if possible on the international expansion. So maybe starting from the U.K., you put 18,000 clients as of October '21, obviously, that is somewhat aligned with your initial guidance, but clearly, looking at the size of the market, it would be difficult to ignore the fact that the opportunity isn't very much lighter than that. So I guess the initial -- the first question is, what do you think Fineco can do to take advantage of the opportunity given that you clearly came to the market with a very attractive offering. On the marketing, specifically, you've mentioned, for example, that you're developing a new model to maximize the marketing efficiency, maybe can you give us a bit more color on what that is and what that -- what you're expecting to kind of get from there?

And then the second leg to the same topic would be what lessons you've learned from the U.K. that could ensure a faster penetration in Germany or in other words, what are you planning to do differently when you enter the German market, which I believe you said within the first half of next year versus what you have done from an operating perspective in the U.K. a few years ago? And then finally, overall, obviously, your cost guidance excludes marketing, so can you give us maybe a bit of a guidance on what we should expect on the step-up of costs -- of marketing costs both from the new marketing activities in the U.K., but also the potential launch in Germany next year?

[Alessandro Foti, executive]

On the first question, Paolo, if you want to give a little bit more -- to give a little bit more visibility, please?

[Paolo Grazia, executive]

Yes, yes, basically, we are aware of the fact that there is a great potential in the U.K., but not also in the U.K., the entire European nations, countries. So what can we do to make all this much larger, we have to do smart marketing, that's the way we have to proceed. So basically, we have, as you said, great platform, great products, one of the best pricing list in the country. So we have to be known by the potential clients. So we are getting better and better in understanding how to acquire clients, customer -- the cost of acquisition is lower and lower every single month and we do campaign.

So I think it's crucial to -- of course, you have to adopt the platform, the products, in some countries, you have to use some products, some other different products, but I think it's crucial to understand and how to market the platform and the offering in the U.K. So it took some time for us to understand exactly what to do, where to spend, how to spend because every country is different. So in Italy, of course, we have the financial planners that are great channel to acquire clients, more than 95% of our clients in Italy are acquired by the financial planner. And so we took some time, now we have a clear idea how to proceed with the marketing campaigns to acquire clients.

So we are -- as we said in the presentation, we plan to spend more in the U.K. market. And we will be also present on TV ads, for example, we didn't do it before, we will be much more present in affiliation programs and all the stuff, of course, digital is going to be lion's share. But I think we quite well understood how to spend this money to be much more efficient and to grab a market -- bigger market share. And yes, yes, basically, this is the picture.

[Alessandro Foti, executive]

Regarding the -- clearly, the experience we made in U.K. is going to become extremely powerful in making even more precise and effective what we are going to do in Germany, because clearly, we made experience, the general market is different, but for sure, it's going to help. In terms of marketing expenses, it's -- as I were -- we were saying before, it depends on the market conditions, the kind of feedback we are receiving. So we are not saying we are going to spend, for sure, we are going to spend more, but -- and it's going to be perfectly in line with our extremely progressive approach. So the more we get the right answer and feedback by the market and the more we are going to spend.

[Roberta De-Luca, analyst]

Just a clarification, Alessandro, I believe during the call, you mentioned that the majority of your U.K. earnings are derived from the broking activities, what other earnings do you get from the U.K. business?

[Alessandro Foti, executive]

U.K. business, there is the other companies are presented by the payments, so the multi-currents account, and the beginning of -- the beginning of something coming from the investing business.

[Operator]

[Operator Instructions] Mr. Foti, there are no more questions registered at this time.

[Alessandro Foti, executive]

Thank you for the questions. And as usual, if you need to make some more deep dive, please make us a call and we can arrange a follow-up. Thank you again for your attention.

[Operator]

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