MILAN, Nov 7 (Reuters) – Italian online bank and brokerage Fineco (FBK.MI) on Tuesday signaled a possible drop in its 2024 net financial income (NFI), sending its shares down 2.8% after clients moving cash into government bonds again hurt its deposit base.
Analysts said the weak outlook and the outflows had overshadowed better-than-expected quarterly earnings.
Fineco uses NFI as a key profit measure tracking both income from the gap in lending and deposit rates as well as income from its large government bond portfolio.
Fineco, which pays no interest on deposits, has been particularly affected by the competition government bonds pose to bank funding now that they again pay positive returns.
Deposit outflows forced Fineco to cut its outlook for its 2023 net interest income earlier this year.
It said it expected deposits to stabilize next year after the offer of a new government bond aimed at small savers in October cost 909 million euros ($970 million) in direct funding as customers bought 620 million euros of the new retail bond.
Fineco said it had changed its current account offer to retain or attract customers, hurting banking fees in the third quarter. It expects banking fees to stagnate in 2024 for a second straight year.
Revenue from its investment services is expected to grow by a high single-digit percentage next year, also in line with the growth posted in 2023.
Jefferies analyst Marco Nicolai said the guidance for investing fees was lower than the current market profit consensus which implied an 11% growth in fees.
Deposit outflows marked the strongest quarterly number year-to-date, Jefferies said, adding that the 1.4 billion euros of inflows into assets under custody were the best reading so far this year.
However, assets under custody are less profitable for savings managers such as Fineco than assets under management, which rose by only 13 million euros in the quarter, the lowest figure since October 2018, according to Citi analysts.
Chief Executive Alessandro Foti said investors had been questioning Fineco about its sovereign portfolio, as Italian bonds weaken in tandem with Europe’s economy.
Foti said some investors were considering under-weighting Fineco shares in their portfolios given to its exposure to Italian debt, adding the bank at present had no liquidity to invest and would not add to its sovereign portfolio.
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