• Total Net Inflows: EUR10.4 billion, with EUR7.6 billion in managed assets.
• Net Income: EUR1.12 billion, a 36% increase from 2023.
• Performance Fees: EUR370 million growth.
• Operating Margin: EUR1.1 billion, a double-digit increase.
• Net Interest Income: EUR811 million, up 8% from the previous year.
• Cost-to-Income Ratio: 39%, improved from 2023.
• Total Assets: EUR138.5 billion, a 17% year-on-year growth.
• Loans Granted: EUR3.1 billion, a 4% increase year on year.
• Net NPE Ratio: 0.79%.
• General Insurance Premiums: EUR206 million, an 11% increase.
• Customer Base: 1,919,000, a 7% increase.
• Family Bankers: 6,415, a 3% increase year on year.
• CET1 Ratio: 23.7%.
• Spain Net Income: EUR81.1 million, a 31% increase.
• Spain Total Assets: EUR13 billion, a 24% increase.
• Spain Managed Assets: EUR9.6 billion, a 33% increase.
• Spain Net Inflows: EUR1.5 billion, a 74% increase.

• Warning! GuruFocus has detected 3 Warning Sign with FRA:ME1.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Banca Mediolanum (FRA:ME1) achieved record-breaking total net inflows of EUR10.4 billion, with EUR7.6 billion in managed assets.
• The company surpassed the EUR1 billion net income milestone, reaching EUR1.12 billion, a 36% increase from 2023.
• Operating margin saw a double-digit increase to EUR1.1 billion, reflecting strong operational performance.
• The cost-to-income ratio improved to 39%, driven by stronger top-line growth and higher recurring fees.
• The company proposed a EUR1 dividend per share, including a special dividend due to extraordinary performance fees.

Negative Points

• Net interest income is expected to decrease by about 5% in 2025 due to changes in the yield curve.
• The equity component of managed assets slightly declined, now standing at 58%, due to a shift towards fixed income funds.
• Provisions for risk and charges increased significantly, partly due to a drop in interest rates affecting severance pay provisions.
• The company anticipates a decline in CET1 ratio by about 2 percentage points due to the implementation of Basel 3 regulations.
• The acquisition costs to gross commission ratio saw a modest uptick, driven by higher bonuses from increased inflows into managed assets.

Q & A Highlights

Q: Can you provide further indication on the sustainability of the EUR7.5 billion net inflows into managed assets beyond 2025 and guidance on 2025 margins? A: The EUR7.5 billion target is sustainable due to the increasing number of salespeople and customers. However, this figure is sensitive to market conditions. If markets behave normally, this amount could increase over the medium term. Margins are expected to decrease slightly due to the success of the intelligent investment strategy, with recurring fees potentially dropping from 212 to 207 basis points.

Q: Can you explain the increase in net interest income (NII) in Q4 despite promotional pressures, and the reasoning behind the EUR0.75 base dividend? A: The NII increase was due to a decline in the cost of funding and treasury funds' impact from rate cuts. The EUR0.75 base dividend reflects a 5-6% growth expectation, with potential adjustments each year. The dividend increase is supported by projections of commissions, NII, and capital ratios.

Q: What are the assumptions behind the new guidance for cost of funding and expected loan volumes for 2025? A: The guidance assumes an average three-month EURIBOR of 2.37% and includes ongoing promotional campaigns. Spain is expected to replicate 2024 results in customer and inflow growth, with a focus on improving existing bankers' productivity rather than significantly increasing their numbers.

Q: Can you elaborate on the growth in recurring management fees and the strategy for banking consultants? A: The growth in management fees is driven by higher average managed assets. The banking consultant project aims to increase productivity of private bankers and train future family bankers. The project has shown significant success, with plans to expand the number of consultants to 550.

Q: What are the main risks to your positive outlook, and will you consider mergers or acquisitions? A: There are no significant threats to growth, though market conditions may slow it down. The focus remains on organic growth, with no current interest in mergers or acquisitions. Basel 4 will slightly impact fees but not significantly affect growth strategy.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.