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Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the FinecoBank Third Quarter 2022 Results Conference Call. [Operator Instructions]
At this time, I would like to turn the conference over to Mr. Alessandro Foti, CEO of FinecoBank.
Good afternoon, everyone, and thank you for joining our third quarter results conference call. Before going into the details of our presentation, let me please remind you that the big change in the structure of the market over the recent months is further enlarging our growth opportunities as a platform.
As you know, our new dimensional growth is underpinned by the recent acceleration of the structural trends that are reshaping the society. This has been further strengthened by the increase in the interest rate scenario since the beginning of the year.
The main outcome is that Fineco is becoming more and more a fast-growing and capital-light business model with a structurally higher profitability and the structurally higher room to dispose of it. This will allow us to distribute a higher level of dividends and at the same time to meet the position to invest more for our growth.
Let's now move to Slide 5. Going into the details of our results, adjusted net profit in the first 9 months of the year was equal to EUR 303 million, up by 17.7% year-on-year, thanks to our diversified business model, able to deliver strong results in every market condition.
Adjusted revenues at EUR 684 million, increasing by 14.6% year-on-year and mainly supported by investing, thanks to the volume effect and the higher control of the value chain by Fineco Asset Management and by the net financial income, which is underpinned by our clients' very sticky and valuable transactional liquidity.
Operating costs were well under control at EUR 204 million, increasing by 4.1% year-on-year by excluding costs related to the growth of the business and confirming operating leverage as a key strength of the bank. Adjusted cost income ratio was equal to 29.8%.
On the cost, let me please remind you that the strategic decision to manage 100% internally our IT is protecting us from the inflation on IT cost. Our capital position confirmed to be strong and safe with a common equity Tier 1 ratio at 20.39%. Our commercial activity continues to be extremely solid. Whilst in October we have a net sales at around EUR 700 million and a strong mix with around EUR 100 million in assets under management and around EUR 300 million in assets under custody.
Estimated brokerage revenues in October at around EUR 14 million, around 20% higher compared to the average October revenues in the period 2016-2019. This result was achieved despite market volumes extremely low in the month and close to the historical loss. This confirming once again, that the floor of the business is now definitely higher.
Let's now move to Slide 6. As announced, we reached very strong results also in the first 9 months of the year, with adjusted net profit at EUR 303 million, plus 17.7% year-on-year on a like-for-like basis, despite the very challenging macro scenario. The quarterly decrease is entirely explained by the systemic charges booked in the third quarter of this year.
Revenues at EUR 684 million, up by 14.6% year-on-year as we have been able to catch the strong acceleration of the structural trends in place, mainly thanks to the contribution of investing and to the robustness of our net financial income. Operating cost at EUR 204 million, well under control and increasing by 4.1% year-on-year, excluding cost strictly related to the growth of the business.
Let's now move to Slide 7 and start to analyze more in details the dynamics of our results. Net financial income in the first 9 months of the year at EUR 261 million, increasing by 20% year-on-year, with net interest income at EUR 211 million and profit from treasury management at EUR 49 million.
Let me highlight that net interest income is progressively increasing, thanks to the strong gearing to interest rates that we have, driven by our clients' valuable and sticky transactional liquidity. We are continuing to accelerate the growth of our nonfinancial income which [Technical Difficulty]
Excuse me, this is the operator. I cannot hear you anymore. [Operator Instructions]. Mr. Foti, you're line is open.
Yes. Sorry for the interruption. We're continuing to accelerate the growth of our nonfinancial income, which in the first 9 months reached EUR 423 million, up by 11% year-on-year, mainly thanks to the positive contribution of investing and banking.
Now jumping to Slide 23. We will deep dive on the performance of the brokerage business. Overall, brokerage registered an excellent first 9 months at EUR 149 million despite the persistent and negative market context in terms of volumes and low market, continuing a structurally higher floor compared to pre-pandemic levels regardless of market conditions.
As you can see in the chart on top of the slide, in the third quarter of this year, brokerage revenues reached EUR 42 million, resulting in a monthly average 24% higher compared to the monthly average revenues in the period 2017-2019.
Let me remind you that the growth of the brokerage business is driven by the contribution of 3 structural components. First, the 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 and standing around 35% above the average level of 2018-'19.
This trend has been confirmed also in the most recent quarters despite the low volumes on the market. And our target market is focused on wealthy and financially aware clients able to trade in every environment. Third, we're continuously increasing our retail market share.
Let's now move on Slide 9 for a focus on investing. Fineco is positioned in the sweet spot to capture the structural trends in place in Italy. And also thanks to our initiatives, we have experienced a strong acceleration towards assets under management.
On top of this, Fineco Asset Management is delivering on its continuity and taking more control of the value chain. As a result, investing revenues were equal to EUR 228 million in the first 9 months of 2022, increasing by almost 18% year-on-year, with management fees increasing by 18.5% year-on-year.
Let me highlight that the strong contribution by Fineco Asset Management has been able to sustain margins and revenues. Management fees margins after tax reached 53.3 basis points in the quarter and pretax reached 71.6 basis points, increasing despite the strong negative market performance in September, which is expected to have an impact on the fourth quarter. In the first 9 months, management fees margins after tax increased by 52.7 basis points.
Let's now move on to Slide 10 for a focus on our cost. This slide confirms, once again, efficiency to be part of our DNA and core in our bank, representing a clear and unique competitive advantage.
This quarter was characterized as well by cost directly related to the strong acceleration of our growth dynamics in the new normal world. Operating costs in the first 9 months of the year at EUR 204 million, growing by 4% year-on-year, excluding costs related to the growth of the business.
Mainly additionally EUR 5 million cost for Fineco Asset Management that are current with acceleration to further expand its business and have a higher control of the value chain, additional EUR 3.2 million in marketing costs.
Staff expenses at EUR 86.5 million in the period, increasing by 4.8% on a yearly basis, net of the cost related to the expansion of the business of Fineco Asset Management. Finally, non-HR cost at EUR 117 million, growing by 3.6% year-on-year, net of the above mentioned costs related to the growth of the business.
Let's now move on Slide 12 for a focus on our capital ratio. Fineco confirmed once again a rock solid capital position on the wave of a safe balance sheet. Common equity Tier 1 ratio at 20.39%., leverage ratio at 3.88%, risk-weighted assets at EUR 4,764 million and total capital ratio at 31.11% as of September 2022.
Let's now move on Slide 19 on guidance. As anticipated at the beginning of the call, we are in the sweet spot to benefit from the new market structure. Let me add that despite the current volatile environment, the growth of the revenues expected for 2022 has strongly improved compared to the last quarter presentation with a different mix, thanks to the quality of our diversified business model.
With regards to our banking revenues, we expect net financial income in 2022 to be around EUR 380 million with the current forward rate curve. In 2023, we expect that the net financial income to increase by at least 70% compared to the upward revised 2022 expectations and already considering an early repayment of TLTRO in November 2022.
Going forward, we expect the net interest income to keep on benefiting from the new interest rate environment, both thanks to the sensitivity and to the volume increase.
Finally, thanks to this new environment, we will take the opportunity to continue the diversification of our bond portfolio by reinvesting in European jobs. Overall, banking fees are expected above the EUR 50 million in 2022. In 2023, they are expected to keep on growing, thanks to the increase of the client base.
On investing, taking into consideration the negative market effect up to October, we confirmed 2022 revenues to increase by around 10% year-on-year with higher management fee margins. Overall, bank's asset under management net sales are expected at around EUR 3 billion, while for Fineco Asset Management, we expect the retail net sales around EUR 2.5 billion. Our financial planner network is expected to increase by around 110, 130 financial advisers.
Going forward, we expect around EUR 5 billion net sales per year in the overall bank's asset under management. For our Irish company, we expect retail net sales at around EUR 4.5 billion per year.
Finally, despite the challenging context this year, we confirmed the increase of our management fees margins after tax up to around 55 basis points by 2024, thanks to the Fineco Asset Management operational efficiency that is more than offsetting the negative market performance. Pretax margins are expected to increase slightly less versus the previous expectations at around 73 basis points by 2024, due to the negative market effect.
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. Let me remind that this trend has been further confirmed so far in 2022 despite the worse market conditions in terms of volumes.
Operating costs in 2022 are expected to grow at around 5% year-on-year, not including around EUR 7 million of additional costs related to Fineco's strategic discontinuity and additional marketing costs. On this, in the coming months, we will invest a few millions to take advantage of the strengthening of the structural trends.
Finally, let me please underline that the strategic decision to manage our IT 100% internally is protecting us from the inflation on IT cost. And that going forward, we expect Fineco Asset Management, the cost to stabilize.
Cost/income, we confirm our guidance of a continuously declining cost/income in the long run, thanks to the scalability of our platform and to the strong operating gearing we have. Systemic charges for 2022 are expected in a range of EUR 45 million, EUR 47 million.
On 2022 tax rate, we expect a slight decrease by minus 0.5 percentage point, considering the most recent interest rate scenario and therefore, according to the revenue mix.
On capital ratio, we expect the CET1 ratio to remain comfortably above the floor of 17% and leverage ratio very well under control in the range between 3.75% and 4% currently with the combination of both a strong acceleration in the growth of the bank and the distribution of generous dividend. On dividend per share, going forward, we expect that it constantly increasing. Also thanks to the progressive delivery on our strategic discontinuities.
Cost of risk was equal to 2 basis points, thanks to the quality of our lending portfolio that is offered exclusively to our loyal customer base. In 2022, we expect it in a range between 3 and 8 basis points.
Finally, we expect a robust and high-quality net sales with a mix mainly secured towards assets under management and with a lower component of deposits, thanks to the all-new initiatives we are undertaking.
To sum up, the outlook for the bank has strongly improved compared to the previous guidance we gave in the first half of 2022. Hence, the higher expectation of net financial income, driven by the current forward rate curve is far more than offsetting the slight decrease in the expectation related to the growth of the investing.
More in details. The uplift on net financial income is expected at around EUR 50 million in 2022 and by at least EUR 200 million in 2023. On the other hand, on investing revenues we confirm our previous guidance for 2022, and we slightly decreased our expectations for 2023 growth by only EUR 10 million, EUR 15 million.
Let's now move to Slide 20. As you know, Fineco Asset Management is progressively taking more control of the investing value chain, resulting in higher revenues and margins for the group. The contribution of Fineco Asset Management to the group asset under management net sales is further improving regardless of the macro scenarios, moving from 55% in the first 9 months of 2021 to 75% in the same period of 2022.
In the first 9 months of the year, our Irish company recorded EUR 1.9 billion net sales in retail classes, in a market environment much more complex compared to the same period of 2021.
Fineco Asset Management continued to deliver in the internalization of the value chain by collecting net sales of funds underlying of wrappers. As a reminder, this process is linked to the substitution of Fineco Asset Management funds within the building blocks used for funds of funds or insurance swappers, this leading to an additional margin contribution for the bank.
To conclude, let me highlight that thanks to the full control of the value chain, our Irish company can offer, at the same time, both efficient pricing for clients while retaining higher margins.
I'll now leave the floor to Paolo Di Grazia, our Deputy General Manager for an update on our international business on Slide 24.
Thank you, Alessandro. On Slide 24, we are presenting the strategy for the development of our business abroad where we leverage on simplified and digital-only offer.
As you know, we are getting ready to the deployment of our brand-new platform for investments that we have developed internally, which will be highly scalable and multi-language. This will allow us for a smoother and more straightforward start-up process for entering new countries as it will all imply a business and marketing effort to identify the right set of products and services.
Moving now on to the update on our U.K. business. Let me first remind you that we are on talks with the local authorities on the post-Brexit setup. For this reason, we have reduced our marketing activity over the last few months. Despite this, our business is gaining traction, thanks to the word of mouth, and we are improving our revenue generation.
As we have already anticipated, the next country, we are planning to approach is Germany in 2023, leveraging on our new platform for investment. Our plan to develop the offer in 2 steps: first, brokerage and multicurrency; second, investing with no network of financial advisers.
The offer will tailor German market customers' behaviors, leveraging on CFDs, certificates and DTS, while the brand positioning we will look to acquire sticky, high-value and financially aware clients looking for fairly priced quality service as in our DNA.
Finally, in the next few years, we plan to approach different countries across Europe depending on the opportunities that may arise.
Thank you for your attention. Please, Alessandro.
Thank you for your time, and now we can open the call to questions.
[Operator Instructions] The first question is from Giovanni Razzoli of Deutsche Bank.
A couple of clarifications on my side. If I go back to the slide of the outlook, if you can please clarify because the line was not very good. What you expect in terms of investing revenues for 2023? You've mentioned EUR 10 million-EUR 15 million of lower investing revenues for '23. Is my understanding correct? And I also missed what you said you do expect in terms of improvement in NII? So if you can please confirm that.
And related to that, I've see that you have marginally revised downwards the target for the pretax fee margin in 2024 from 75 to 73 basis points in 2024. So while you have kept the net margin stable, so I was wondering whether this is due to the different mix in terms of contribution of the different product factors. So probably there is something related to even higher contribution that you expect now from Ireland. So if you can please clarify this?
And another clarification on 2023 for net financial income. Is that correct to assume that you don't expect any major contribution from trading from profit from treasury management for 2023?
And the last question again on net financial income. Can you share with us what would be the target in '22 and '23, assuming the spot curve rather than the forward curve.
Let me start. First of all, is we are not saying that we expect a decrease on investing revenues by EUR 10 million, EUR 15 million going through 2023. But -- because we expect the investing revenues keeping on growing. What we say that with respect to what we were expecting in terms of growth, there has been respect to the previous guidance, a reduction of between EUR 10 million and EUR 15 million. So it's EUR 10 million, EUR 15 million of less growth, but not a decline in comparison to 2022. And I've been clear enough on this point or because probably our communication has been...
You were clear in the conference call, but I -- we were protecting my question. So I got it correct. So it's EUR 10 million, EUR 15 million of lower growth compared with your previous year. So you were clear.
Yes, yes.
On the NII then if you can please repeat what you said and maybe trying to...
So on NII, what we said was we expect the guidance we gave in the first half, we expect an increase of additional EUR 200 million considering the increase of -- expected increase of rates. So this is what we are expecting by 2023.
And on -- regarding the marginal reduction on the downwards of the pretax margin level is -- this is mostly related to the market effect. So the negative market effect. At the same time, we are reconfirming the 55 basis point rise after tax because the positive impact by Fineco Asset Management is completely offsetting the negative impact generated by the market effect.
And it's clear that without that negative market effect, probably you could expect to have an after-tax margins even higher than the 55 basis points. So this is the reason of the -- why we have an after-tax margins that is a -- pretax margin that is modestly lower the previous guidance and after tax margins that is remaining pretty stable.
Yes, we confirm that we don't expect any significant profits from treasury management in 2023. So the practically the almost entire dimension of the net financial income is going to be represented by net interest income.
And regarding the -- to give you another -- net financial income for 2022 and 2023, assuming the spot curve that we have to return to you with the numbers, because we are not in front of us -- because we think that using the current spot curve, considering that there is this curve that you're seeing -- in any case, it's just at the moment is behind what is expected to be done, for example, by Central Banks and so on. It doesn't make a lot of sense to make that kind of calculation. But in any case, my colleagues are going to return to you with a precise calculation of that number.
The next question is from Enrico Bolzoni of JPMorgan.
So just a clarification on the margin on the investment business net versus the gross of taxes. So the fact that the net of taxes remained flat despite the growth came down a bit, is just to the fact that FAM is becoming increasingly a larger proportion of the AUM and as such you benefit from the lower tax rate. Just clarifying that.
Related to that, another question. I mean, clearly, you have been impacted just like other asset managers by the negative markets year-to-date. I was just wondering, if it wasn't for the negative market impact year-to-date, is it fair to assume that your margin could have actually go above 75 basis points? Because it seems to me that you managed to keep it pretty high despite the negative mark-to-market and only now you brought them down. So I'm just curious to understand, over the medium to long term, what should we expect in terms of ongoing margins for the business?
Then I have another question on adviser productivity. You gave some color clearly that you're recruiting is on track. But you also have a slide where you say you have a number of new initiatives that in theory will improve the adviser, the customer experience, but also the way advisers can run their business.
I was just wondering, do you have any idea in terms of what do you expect in terms of adviser productivity. So by -- can we put a number to that, by how much do you think the productivity of your adviser could improve as a result of these new initiatives?
And the final question on the brokerage-only account, can you just remind us in terms of timing, so when should we expect it to be live? Is it going to be this year, it's going to be next year? And have you done any study or what is the addressable market and so how many customers you think there are, for example, in Italy that potentially can join your platform once it's launched?
So let me start by the first question. So the -- yes, the answer is yes. The reason of the resilience of the net versus gross is thanks to the positive impact of Fineco Asset Management. And going directly to -- also answering to the second questions. The answer is, yes, if it was not for negative market, asset margins could go above the -- yes, above 75 basis points as well.
Financial planners productivity initiatives to improve the customer experience. Just to give you an idea of the journey of increasing the financial planners productivity is just at the beginning. The bank has a little a bit more than 1,400,000 clients. And of which the really -- of which we can say that probably more than 800,000 that can be related to a financial planners.
But the number of clients that they are -- we can say that they are really actively managed by financial planners are probably in the region of 350,000-400,000 clients. And this is because financial planners clearly tends to be concentrated on the clients that for them are more interesting in terms of the national clients and also easiness to deal with them.
And the way for filling the gap is to put in place initiatives, technology and so on in order to have financial planners in managing proactively a larger number of clients. So as you can see by the numbers, the room for increasing the productivity of financial planners is still enormous. And we remain absolutely very positive in this direction.
Brokerage only account, and I'm leaving the floor to Paolo, if you want to give a little bit more color on the -- on when we think to launch the brokerage only account and what we expect in terms of addressable market and so on. So please, Paolo.
Yes. Basically, we are testing the new brokerage account. We plan to deliver the new setting by the first quarter of next year. And the addressable market in Italy, we think is for this kind of a business is 100,000-150,000 clients possible target to acquire. Of course, we are aiming of a portion of this amount. The target is quite different from the full-fledged account, so we are targeting more smaller client, basically younger clients. But still, yes, we think this is the addressable market.
And actually, sorry, a follow-up question. I forgot to ask. Can you just remind us that this is on the EBITDA on deposits. So do you still plan not to pay, remunerate anything on deposits given the current rate evolution? At what level of rates would you consider introducing client remuneration?
No, we have not changed anything in the plan. The largest part of our liquidity is transactional liquidity. And so we are not planning to give any kind of remuneration there. On the other side, we have our platform that is offering other banks term deposits, on which clients they can switch real time from their current account there.
And this is going to be used in order to fulfill the expectations by clients that they are looking for a higher remuneration. But again, the duration behind the very low EBITDA of our deposit to rates is related to the business model of the bank. That is, again, is a platform, is many years that the bank is concentrated in taking more clients just thanks to the quality of services and not using rates or discounts and so on for taking them on board. And this strategy clearly is paying off right now that we have rates returning to the normal. So yes, we are not planning to introduce any remuneration on the current account of clients.
The next question is from Domenico Santoro of HSBC.
I think we need to come back a little bit on your guidance on the investing fees to clarify the point. So I understand that we will land at the same point in terms of margin in 2024 because the tax rate basically would be lower. So in this sense, it will be useful to have also a guidance on tax rate for the next year for 2023.
What is not clear to me is the direction of margins in the short term, because if I calculate the Q4 level, of investing fees implied in your guidance that is more or less flattish vis-a-vis Q3, when you usually have some positive seasonality. So I would like to understand a little bit the direction of margins also in the short term.
And it will be also very useful to have a precise guidance on investing fees for 2023 because you said EUR 200 million more of NII, but we had the previous number on the NII. Now you say EUR 10 million, EUR 15 million less in terms of investing fees, but we don't have basically the guidance on the investment increase for next year. So it will be very useful in order to understand and clarify the point.
The second question is why you downgrade the medium, long-term target in terms of net inflows by EUR 1 billion presumably, this is due to rates or for different reasons.
And the third question is that is on dividend. First of all, what you have accrued so far in the 9 months for 2022? And a more general comment for 2023, because your profitability will increase significantly next year just because you're going to grab the extra margin in terms of interest rates.
So given that your leverage ratio, you say is fine and it doesn't need to improve. I know that you always say that Fineco is not a dividend story, but I just wonder whether next year, given the more that is coming from NII, you can be a little bit more generous in terms of payout.
So let me start on the guidance on investment fees. You're right that usually, there is a positive seasonality going through the fourth quarter, but this is right when you are in the bull market. And clearly, we are not there. And as we explained, the negative impact caused by the collection of September is going to be charged particularly on the fourth quarter. So this is the reason why you are correct, we expect a relatively flat line on the fourth quarter.
On the precise guidance on investing because we -- probably we had been a little bit confusing in the way we presented the guidance. So when we are saying that we expect a EUR 10 million, EUR 15 million or less is expected the last guidance we gave in the first half. So Lorena, in the first half, the guidance on investing grows exactly -- if you can help me. Lorena, are you there?
Ms. Pelliciari, you're line is open.
Probably, Lorena is not there. So sorry. But in the first half, we gave a guidance on investing, growing that was expected to grow probably in -- between 10% and 15%, something like that. So Gianluca and Franca, can you give me assistance in reminding the guidance of the first half?
The first half on the 2022, yes, it was 10%.
Yes. So practically -- in any case, so we -- so practically in -- so when we are seeing EUR 10 million, EUR 15 million less is -- on respect to the previous guidance that was expecting to have EUR 4 billion by year-end in terms of assets under management and EUR 6 billion recurring.
Now we changed the indication, we expect EUR 3 billion by the year-end and EUR 5 billion. So this means that the growth -- the expected growth -- the growth is going to be there in any case, so we are expected then definitely a growing investing business, but with a reduction we expected -- so practically, the message is, we can send and probably we have been a little bit confusing.
The message is the combination of EUR 3 billion instead of EUR 4 billion by year-end. And at EUR 5 billion is recurring instead of EUR 6 billion. If we put everything together, the result is an is worth between EUR 10 million and EUR 15 million less. If you can see the dynamics on the financial income, the increase is, we expect the guidance on the first half is at least EUR 200 million more.
So the message that we want to give is that considering that we had some comments saying that the positive uplift of financial income is going to be offset by the -- it's going to be offset by the negative -- by the reduction of guidance on investing. There is an absolutely disproportion because the expected growth on financial income is in the region of hundreds of millions -- EUR 200 million. And the lower growth on investing is in the region between EUR 10 million and EUR 15 million. So we are -- it's a completely different magnitude. And so I don't know Domenico if I've been able to clarify a little bit this concept.
Yes. But I just want to understand a little bit probably about the -- I will follow-up with Franca later. But just want -- I want to understand a little bit the direction of margins in the short term in Q4 and maybe in 2023. Is the direction still positive? Or you expect basically a sort of a deceleration at this point?
Clearly, we expect a deceleration in terms of growth. But clearly, the path is in the direction of the continuous increase, but this currently the guidance we are giving. So because it's clear that there is a component that we cannot manage, that is the market effect. Because the main reason behind the slowdown in the part of growth of the margins on the investing is exclusively related to the -- it's mostly related to the market effect, so this is the impact. Because for the remaining part in terms of mix, the effectiveness of Fineco Asset Management, then nothing has changed. So this is the -- so the trend is still in the upward direction. And -- but, clearly, the progression is slowing down, but this is mostly related to the market effect.
Alessandro, can you hear me now?
Yes.
Okay. And...
But I answered it to Domenico, so thank you, Lorena.
Okay. Thank you.
The second question is why the downgrade of the medium, long-term target. This is in order to is that we prefer to keep a cautious approach because clearly, there has been a -- there is underway and structural change in the market with higher rates and so on. We are -- we remain absolutely very positive. So we are fully convinced that as soon as we have a little bit more visibility on the market, the path is going to be resumed in the right direction.
We are preparing a brand-new generation of solutions in order to -- that has to be current with the new context we are going through. But clearly, considering the absolutely [ volatile ] here that we are experiencing, we prefer to be more cautious in the guidance. But there aren't any specific reasons for doing that. The only reason is because we are going through an extremely complex scenario, and so we prefer to keep a more prudent guidance there. But not because we had any specific concern on the direction of the asset under management business.
On dividends, so what we have accrued is mostly -- is clearly that for regulatory reasons, is perfectly coined with the latest payout we had, so it's more or less in the region of 70%. And we are remaining on the idea that we -- Fineco is not the kind of company that has to give a specific target on payout because Fineco is a growing company. And -- but it's clear that the dividend per share is expected to grow quite considerably going through 2023 because the profitability of the bank is going to jump in a big way and as well. But there is no reason to do any significant change in what we are doing in terms of dividend payments.
The next question is from Filippo Prini of Kepler.
Some clarification, if you may. The first one, if you can add some comment on the decline in risk-weighted assets that you've seen at the end of September compared to end of June.
Second clarification is on your latest listing of ETF -- the offer of ETF, if you envisage any impact, if any, on your margin of investment products.
The third one is on your loans at floating rate. Do you see with higher rate any concern on the ability of your clients to meet this payment? If you can remember, which is the collateral guarantee of these loans?
And last one is, if you can share with us already the ballpark figure on the volumes that your platform has been able to generate in selling third-party time deposits?
So on the decline of risk-weighted assets, I leave the floor to Lorena, please, if you are there, you can give.
Yes. I am here. I had a technical problem before. Yes, the decrease of risk-weighted assets is mainly driven by the decrease of unsecured lending because we closed 2 positions with U.K. counterparties. As you know, U.K. counterparties after Brexit are weighted at 100%. Our job was in these last months to close as soon as possible the position that we had with the U.K. counterparties. And this is one of this activity.
Yes. On ETF offer at the moment, Fineco as you are familiar, is a platform that is offering right now an quite wide range of ETFs on the platforms, and this is a growing activity by our clients. So we -- the launch of ETFs is giving to us the opportunity to take part to this growing plan. So we think that this is an opportunity in terms of additional revenues. It's not a trend. Because in any case, our clients -- there's thousands of ETFs available on the platform that can buy itself, but this is the real strength of Fineco that is an absolutely one-stop solution for clients.
And introducing our whole ETFs, clearly, we have the possibility to take a piece of this fast-growing trend. We have the opportunity to have the building blocks that we can use in our advisory solutions. So definitely, ETFs -- the launch of our ETFs is going to be revenues accretive for us and is not a problem.
And the collateral guarantee of the Lombard loans, first of all, the clients that they are using the Lombards are the most valuable clients. And the approach we are using clearly is we are measuring and evaluating the credit value of our clients, we are not just giving the Lombard related to what they are giving to us in terms of guarantee. So we are evaluating the overall position of client. So there are clients that are absolutely are in an excellent position. So we don't -- and also the risk management process we have in place is extremely strict. And so we don't have any issue related to the rising rates and declining markets.
And volumes on selling of third-party terms deposits, this is not big, absolutely despite the fact that one single click client that can trust their liquidity there. But at the moment, I don't know, Paolo, if you have the most updated numbers on the platform?
EUR 150 million.
Yes. So this is very -- 100, very small. But again, we are not surprised considering that the most part of our liquidity is transactional liquidity. It's no liquidity that is changing rates.
The next question is from Elena Perini of Intesa Sanpaolo.
I would like to have some clarification on your net financial income guidance because you mentioned EUR 380 million for the current year. So assuming no more treasury profits, then can we assume a net interest income around EUR 120 million in the fourth quarter? This is what I can argue. So I was wondering if you can confirm that?
And then for the following year, so for 2023, you were mentioning EUR 200 million more in terms of net interest income or net financial income? Because also with reference to this, if we do not assume any profits on treasury management for next year, then we would have approximately EUR 580 million in terms of net interest income. So I'm a bit confused about the distinction between net interest income and net financial income, especially for the following year. So if you can give me some clarification there.
No. Thank you, Elena, and I apologize again for having given such a misleading indication, because I understand that we try to give -- to be more precise, the most precise possible and limit confusion. So practically, I'm going to -- so practically, we expect EUR 380 million of financial income by the year-end. So Lorena, what does it mean in terms of fourth quarter? So just you know...
EUR 120 million is fine.
Yes. So on this, you are perfectly aligned. Then the guidance we are giving is that we expect a rise in the financial income in 2023 by at least 70%. So if you keep -- if you take EUR 380 million, and increased EUR 380 million by 70%. So again, sorry, Lorena, if I'm a little bit confuse...
We are EUR 646 million.
If our guidance is right. We expect 600 and, excuse me, Lorena?
EUR 46 million, EUR 50 million, EUR 50 million, EUR 650 million, is where...
EUR 646 million is our net interest income without any significant contribution by the treasury management. I don't know, Elena, this is clear -- we have been a little bit less confusing now.
No, no. Well, it's very clear.
So 2022, EUR 380 million and 2023, if the market is right, is more than EUR 640 million of financial income.
The next question is from Andrea Vercellone of BNP Exane.
Four questions. The first one is on your bond portfolio. You mentioned earlier on in the call that you were thinking of further diversifying it. At the moment, including the creditors bond, 41% of it is in Italy. Can you just elaborate a little bit as to what you have in mind for the future years in terms of what does diversify mean?
Second question is on your mortgage portfolio. Can you tell us what percentage is floating? Third is on your Lombard loans. Is there any pressure on spread there as rates move higher? Or you will continue to price, as you said, on the basis of, well, the riskiness of the customer, the credit risk of the customer, and therefore, they would just have to pay a higher rate if they want that loan?
And finally, on financial adviser remuneration, you changed it. I don't remember when, I think, last year to only remunerate them on the basis of assets under management, essentially, I'm sure it's much more complicated than that. But essentially ignoring deposits and assets under custody. Given that the rate environment has changed and deposits are actually quite profitable for you, is there any thought on changing this and remunerate back also for deposit gathering or not at all.
Thank you for the question. So on the bond portfolio, what we are planning to do, we are going to keep on -- practically, we are going to stop any buying of Italian and Spanish bonds, but not because we have any specific concerns on Italy and Spain, but just because we went to the higher level of yields. It's giving an absolutely great opportunity for accelerating furthermore the diversification of our balance sheet.
We think that, again, it's not driven by any concern on the -- because there is no reason for having that. But it's because we think that the more balance sheet is diversified and the better it is in terms of -- for our shareholders. And so we are going to keep on moving -- we are going to keep moving there. So keeping on buying Supranational Agencies, other core European bonds.
In the guidance, we are giving to the market on the financial income is we are considering exactly these kind of actions. So not buying Italian and Spanish bonds and keeping on buying core European bonds. On the mortgages portfolio, again, I'm asking to my colleagues to give me assistance. Which is the percentage that is floating versus fixed?
We have a percentage that is floating that is in the region of 15%. But the remaining part that is a fixed rate is hedged, so its performance through interest rate swap invariable.
Yes. Lorena, but the question was in order to understand the possible risk of clients because if a client has a fixed rate mortgages, clearly, it's not exposed to rising rates. If a client has a floating mortgage is exposed to, I think, that Andrea, this is the rationale behind the question. I'm assuming.
It's both sides to understand the risk, but also to understand how much more money you will make as Euribor moves higher. So you're saying that Yes. But effectively, for you, Fineco, including swaps, the entire portfolio or almost the entire portfolio is variable?
Yes. more or less, is variable because we hedge around 100% of fixed rate.
Yes. So for the -- on the client side, the largest part is fixed and so just 15% is floating. But on the bank side, the largest part is floating, yes.
On Lombard loans, any pressure on spread, no also because our spreads are very, very low. So we are characterized by charging very low spreads. So we don't see any kind of pressure there. And we don't plan to change the advisers' remuneration for a very simple reason because strategically-wise, our priority is to move as much as we can, clients in direction of asset under management solutions.
And we have not changed our mind, also considering the much higher level of rates. We don't need to do that because in any case, liquidity is keeping on flowing because thanks to the usage by clients of the platform. And the financial planners, that we want to have financial planners remaining concentrated in doing one single absolutely very important job that is to move as much as they can clients in direction of asset under management.
The next question is from Luigi De Bellis of Equita.
Three quick questions from me. The first one on the net financial income guidance for 2023. Can you elaborate on the volume growth on bond portfolio, if there is some changes on the mix between fixed and variable going forward, and the lending growth implied in your 2023 guidance compared to the 9 months 2022 level?
The second question on the net interest guidance, Implicitly, you expect a significant acceleration in 2023 from the trend of the last 2 months of 2022. You mentioned it, if I'm right, a new generation of solutions to be launched. Can you elaborate on this? How product mix of asset under management products is evolving?
And the last question on the brokerage, can you elaborate on the competition on brokerage if the situation is stable or not compared to the second quarter?
Yes. On net financial income, I'm not sure that I got correctly your question. So when you're opening volume growth or bonding portfolio, so we expect to have an increase of the -- we expect to have an increase of our base of deposits going forward on a run rate in the region of a couple of billions per year, also good. So this is mostly, again, driven by the transactional liquidity.
And so we -- so for this reason, the -- so considering that we don't expect any significant change in terms of evolution of our lending business. So Lorena, what we can think to have in terms of increase on the balance sheet -- so the growth of the bond portfolio. So the investment is on...
And net of lending starting from EUR 2 billion of deposit, and considering the increase of lending, we could estimate EUR 1.5 billion, EUR 1.6 million.
Yes. And in terms of...
Of additional loan.
Fixed and variable...
And variable we are around 50%.
Yes. But we don't expect any significant change by that. So...
Yes.
And -- so the 2023 guidance increased. So -- but you are referring to the assets under management because the guidance has been made...
No, I mentioned the net income guidance. So in Q3, the 2023 implied an acceleration compared to the last 2 months of 2022...
Yes.
I am wondering the reason and you mentioned a new generation of solutions to be launched.
No. The duration is behind because as we explained several times to the market, we -- considering that we are continuously monitoring the clients' behaviors and so on. So the only what is keeping clients cautious and in a wait and see mode is the lack of visibility. As soon as we have this continuous, relentless and negative news flows that is stopping, we expect progressively then returning to a more normal pattern.
And at the same time, also, we are preparing a new generation of products that they are more skewed in direction of rates in fixed income because it's a matter of fact that there is a growing appetite by clients as for rates in fixed income. And so we are -- probably we are going to be ready with the first wave of new generation of products by the by probably the second half of November when Fineco Asset Management is going to launch the beginning of this new generation of products.
In terms of product mix, what we expect is still a growing component represented by investing solutions, so in which we are providing to the client strategy. And so this is a good news because while this is 100% represented by Fineco Asset Management Solutions.
On brokerage competition, the main change we observed that clearly with a much more complex market now the competition represented by the so-called new brokers, particularly we cannot say disappeared, but as completely is much, much lower because clearly, these are really difficult times. If you don't have the right target market, the right clients and so on, it's extremely complex. So I don't know, Paolo, if you want to make adjustment more comment on this point.
Yes. Basically, competition in Italy has been 100% on very small clients, let's say, they have between EUR 5,000, EUR 10,000 to invest. Competition is basically 100% on pricing, on these clients with no or very poor service levels. So basically on our target clients, they have more than EUR 200,000 to invest. Top-end client, we have basically no competition.
But also with the new brokerage accounts, we're going to release in the next few weeks, we will also starting to also target these small clients. We will also definitely close the gap also in this kind of business, which is very less interesting than the other one. But still it's interesting because they are younger clients and sooner or later, some of them they will become a very interesting clients.
The next question is from Adele Palama of UBS.
2 questions from me. One on tax rate for 2023. I don't know if you have already given the guidance, but can you repeat the guidance for 2023. And then on MREL, do you have any pending issuance for 2023 specifically?
On tax rate, we have to remind that tax rate is extremely influenced by the mix. So the more we have revenues -- the more we have revenues produced here in Italy, clearly, in the more year tax rate going up. And the more revenues you are generated, for example, in Ireland and the tax rate is going down. It's clear that in 2023, considering the massive rise of the financial income that is 100% generated in Italy. We expect a rise in tax rate, Lorena, correct me if I'm wrong.
It's correct. It's correct.
But this is not driven by that lower activity by Fineco Asset Management, but just because the reason such a big rise in the financial income that clearly, this is completely generated in Italy, and this is, by definition, is driving up the tax rate.
On the MREL, we -- clearly, we think that probably we are considering that we want to be very well in advance in fulfilling also the future evolution of that parameter. It's probably during 2023, we are going to go through an issuance for the MREL requirements. But in terms of impact on the P&L of the bank is going to be absolutely negligible. So it's not anything material in the overall profitability of the bank.
In the issuance that you are expecting for 2023 are included in the NII guidance?
Yes, yes, sure.
The next question is a follow-up from Elena Perini of Intesa Sanpaolo.
Well, I was just looking at your tax credit acquired. You reached EUR 900 million at the end of September. So I was wondering if you are going on in acquiring them. And what do you, if you can, remind me about the results on this.
No, we are just finishing of discharging the backlog that we had in place. But we are not taking on board new request likewise. So we practically -- the tax credit business has been closed. We are just finishing closing the previous request received in the past month by our clients.
And yield on this, can you remind me about it?
Lorena, we can...
The last -- if we consider the yield on the last price that we have applied to our customer is in the region of 2.5% per year.
[Operator Instructions] Mr. Foti, there are no more questions registered at this time.
Thank you very much for the very interesting Q&A session. And as usual, if you have more to ask, please contact us any time. Thank you again.
Ladies and gentleman, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.