Financial Services Technologies

Transcription

1 CORPORATE PRESENTATION FinTech Group AG November 2017 Financial Services Technologies We got IT

2 1.1 FinTech Group at a glance* Employees Offices Number of Customers Willich Andernach Frankfurt a.m. (HQ) Dusseldorf Berlin Zwickau Kulmbach Vienna B2C B2B Customer Cash Deposits Securities under Custody Number of exchanges and OTC-partners Approx >200k > m 10.3 bn 64 Executed Trades Executed Trade Volume Credit Book (collateralized) Average Interest Rate (Loan Book) TIER-1 Capital Return on Equity p.a. (before Tax) * As of m 38 bn 186 m 4.3% p.a. 41 m 22% 2

3 1.2 FinTech Group AG - our stock Shares outstanding: 16.8m Options outstanding: max. 1.6m Market capitalization: EUR 400m (as of 31/10/17) Share Price (EUR) 24 Oct 2017 PT EUR Commerzbank STOCKPRICE DEVELOPMENT LAST 6M Listed: Scale, Börse Frankfurt Oct 2017 PT EUR M.M. Warburg ISIN: Bloomberg: DE000FTG1111 FTK GR Equity Oct 2017 PT EUR GBC 14 Stock covered by

4 1.3 FinTech Group AG - corporate structure CORPORATE STRUCTURE TODAY 100% 100% FTG Finanz GmbH (100%) 100% AS OF Q Tech-Entity Fin-Entity 100% 4

5 1.4 FinTech Group AG - Executive Committee Steffen Jentsch Stephan Simmang Dr. Benon Janos Frank Niehage Muhamad Chahrour Bernd Würfel Niklas Helmreich Co-Head IT Co-Head IT Head B2B MD FinTech Group Bank CEO FinTech Group CEO FinTech Group Bank CFO FinTech Group Vice Chairman FinTech Group Bank Deputy CEO FinTech Group Bank Head B2C MD FinTech Group Bank ALL EXCO MEMBERS ARE PART OF THE 4 YEAR OPTION PLAN 5

6 1.5 FinTech Group - track record and mid-term ambition Acquisition of service provider XCOM/biw to control cost structure and set-up tech inhouse expertise Implemented high class management team and subsequent restructuring actions Sold CeFDex to Commerzbank to reduce risk structure (strategic partnership) Restructuring of group operations and implementation of IFRS Reporting Boost of organic growth of existing B2C business Sale of loss making AKTIONÄRSBANK, improve annual 75.2 earnings and pool banking activities in FinTech Group Bank AG 95.0 Implement technology based lending and redeveloping treasury with the potential to generate an additional EUR 10+ million Improved B2C product portfolio with Morgan Stanley ETP partnership >100.0 o Continue strong growth of number of settled transactions o Leverage own used value chain by providing unutilized resources to third party B2B clients o Use liquidity from cash deposits to grow the fully collateralized loan book o Up-listing to Prime Standard of Frankfurt Stock Exchange o Further strategic acquisitions & partnerships >150.0 >50.0 EUR million Net Sales EBITDA Net Profit > > a 2015a 2016a 2017e Mid-term ambition 6

7 2.1 B2C - business model of flatex and ViTrade (c70% REVENUE CONTRIBUTION, ~45% EBIT MARGIN) Fastest growing online brokerage business in Germany and Austria, >200k retail clients doing >9m transactions with notional amount of >EUR 65bn p.a. Most trading-active clients in the market (FinTech clients: avg trades p.a. vs. market: avg trades p.a.) Market share of >25% in Germany and >50% in Austria in terms of online brokerage transactions (total est. # of transactions: 50-55m in Germany, 2-3m in Austria) Guaranteed flat pricing model of EUR 5.90 for more than 11 years - regardless of type of asset (stocks, bonds, ETPs, ETFs etc.), transaction amount and exchange Market leading ETP offering with Morgan Stanley partnership, open architecture offering: Commerzbank, Deutsche Bank, Citi, BNP 7

8 2.2 B2C - development of brokerage KPIs A GROWING NUMBER OF BROKERAGE CUSTOMERS (IN K) NUMBER OF RETAIL TRANSACTIONS (IN M) 270,0 12,5 175,4 205,5 9,2 Source: FinTech Group 134,4 149,6 Source: FinTech Group 5,8 7,1 7,7 FY 2014 FY 2015 FY 2016 FY 2017E Mid Term FY 2014 FY 2015 FY 2016 FY 2017E Mid Term 8

9 2.3 B2C - our competitive edge Key drivers for successful brokerage business: cost per trade settlement (CPT), cost per client acquisition (CPA) and outstanding product offering Competitive technology edge due to self-developed, highly scalable security ordering/settlement infrastructure ensures sustainable cost leadership with CPT of EUR 1.45 Each additional trade reduces cost per trade settlement - doubling the # of transactions reduces CPT by >40% to less than EUR 0.80 per settlement Quality of clients matters more than quantity - focused marketing strategy attracts the right clients (>25 trades p.a.) with only EUR 100 CPA vs. EUR at competitors Top notch product partners offering ETFs and ETPs - exclusive joint venture with Morgan Stanley (see case study) 9

10 2.4 B2C Case Study: Morgan Stanley ETP German ETP market size notional of around EUR 70bn pa - FinTech Group with >15% distribution stake In the past: product issuing banks kept 90% of the revenue pool - 10% to product distributor Exclusive Agreement with MS delivers higher revenue stake (50:50) than with other ETP partners (Commerzbank, Deutsche Bank) Already 30,000 flatex-select products issued by Morgan Stanley that clients can trade at no cost AuM component contributes to FinTech Group revenues even if non-flatex clients trade MS products BANKS ISSUE ETPs OFFERED AT FLATEX TRADED BY CLIENTS PAST: TODAY: 90 : 10 split 50 : 50 split Revenue generation for issuing bank through: Inherent interest component Bid-ask spread REVENUE POOL 10

11 3.1 B2B - white label banking & IT services (c30% REVENUE CONTRIBUTION, ~20% EBIT MARGIN) LEVERAGING PROPRIETARY 100% IN-HOUSE BANKING VALUE CHAIN (CORE BANKING SYSTEM AND INFRASTRUCTURE) TRANSACTION AND MARKET MAKER SYSTEMS Example: developing and running OTC trading systems L.O.X. Example: SETTLEMENT AND CUSTODY SERVICES security account and custody services for stock option administration Example: RETAIL BANKING INFRASTRUCTURE full provision of white label banking services for deposit raising and administration Products: Trading system Market maker system Trading platforms Market and price data supply Products: Custody services Payment platform SEPA platform incl. mandate management Online banking Secure transactions Products: Retail deposits Lending infrastructure Brokerage accounts Customer services Regulatory Reporting 11

12 3.2 B2B - fully modular core banking platform Sales Platform Online account opening KYC & CRM Online banking frontend Trading frontend Support / call center Campaign management Client management Online banking Loans Production Platform Accounts/securities accounts mgmt. Payments Clearing / settlement Card management Corporate actions Order mgmt. / routing Money and unit booking Tax processing Regulatory & Steering Platform Accounting Reporting Controlling Risk management Reporting simulations AML monitoring Service management Data warehouse Bus. intelligence / analytics Request and order mgmt. Document archive Commission management Support Platform Authentication and authorization Fulfillment Securities master data Quote feeds Sanctions and blacklists SEPA mandate admin. DMS / WFMS. 12

13 3.3 B2B - client excerpt and case studies Most recent B2B projects: FinTech Group was chosen to set-up the technological infrastructure for digital online retail banks in Germany and Austria including providing several respective regulatory banking processes Bankhaus Obotritia FinTech Group runs and manages in a full business process outsourcing (BPO) the banking operations, including core banking system and all major regulatory banking processes to run the bank Not yet disclosed FinTech Group provides a retail banking infrastructure for deposit collection in a full BPO (including account opening, KYC, AML and all banking center services) for an international bank moving operations from London to Frankfurt due to Brexit 13

14 4.1 The ecosystem - unique combination of independent business models B2C - Brokerage B2B - White label banking & IT services High margin business Volatile business model Heavily depending on capital markets and customer behavior Less predictive revenue streams OPEX driven Stable long term contracts Very low volatility Lower margin than B2C business Highly predictable revenue streams CAPEX driven 14

15 4.2 The ecosystem - creates inherent growth potential B2B Reduce costs Leverage synergies B2C Access to new partner GROWTH Expand product portfolio Increase profitability Increase transactions Improve customer value "customer journey" 15

16 5.1 Growth strategy - how to meet the mid-term ambition Revenues: EUR 150m - EBITDA: EUR 50m - Net Profit: EUR 30m CONTINUE STRONG GROWTH OF NUMBER OF SETTLED TRANSACTIONS WHY: increasing number of transactions drives revenues but also reduces costs per settlement (achieve economies of scale) HOW: Continuous growth in domestic flatex markets Geographical expansion to new markets (B2C) Allow non-flatex customers to enjoy flatex products (new product: TradeNow) Increase number of settled transactions for third parties (B2B) Number of settled transactions (in million) LEVERAGE OWN USED B2C VALUE CHAIN BY PROVIDING IT TO THIRD PARTY B2B CLIENTS WHY: revenues from providing own platform to B2B clients are long-term and predictable cash flows (pay the bills with stable income) HOW: Standardize B2B product portfolio to allow synergies Provide current customers with additional/new products Acquire each and every year 4-6 new B2B clients Keep R&D on a sustainable and innovative level Revenues from B2B projects (in million) USE FREE LIQUIDITY TO GROW THE FULLY COLLATERALIZED CREDIT BOOK WHY: making use of the zero-cost cash deposits allows for additional income on almost zero-risk base (utilizing the by-product) HOW: Increase credit volume with own flatex clients Provide credit products to non-fintech clients (flex-insurance credit) Set-Up of credit products for B2B2C clients (Equatex flex credit) Maintain a fully collateralized approach Size of collateralized credit book (in million) E B2C current markets B2C new markets B2B mid term 2017E existing clients new clients mid term 2017E flatex flex Insurance credit Equatex credit other mid term 16

17 5.2 Growth strategy - B2C B2C - Online Brokerage ORGANIC GROWTH STRATEGY GROWTH STRATEGY BY ACQUISITON Continue organic growth in Germany and Austria and manifest market leadership in terms of client activity and product offering Emphasize focus on becoming the leading European online brokerage business by penetrating new countries Leverage partnership with ETP partner to share penetration and marketing expenses Spread out all over Europe and build the largest pan-european online brokerage business which is big-bank independent using our EU-Passport Search for takeover opportunities in Europe with the following parameters: Higher cost per transaction leveraging our processes and systems to generate higher profit Higher cost per client acquisition apply our marketing strategies to generate higher profit Inefficient product partnerships offer our best-class and broadest product portfolio to generate higher profits Weakly managed under increasing regulatory requirements implement our experienced management team to generate added value Currently operating Potential markets 17

18 5.3 Growth strategy - B2B B2B - White Label Banking/IT Services ORGANIC GROWTH STRATEGY Clear strategy to become Europe s leading transaction processor by offering own-used value chain to third parties Continue focus on transaction settlement and offering settlement as a service to private and specialist banks Current global ROE of 8-10%, ROE of banks in < 4% banks have pressure to reduce costs and to outsource inefficient back office structures and processes Make use of current market and regulatory (ongoing consolidation of banking technology provider affecting more than 300 banks) as well as political environment (Brexit) to attract new B2B clients Each new mandate will contribute at least a contract lifetime revenue of EUR 5-10 million 18

19 5.4 Growth strategy - credit book Setting-up a credit portfolio, diversified over risk, maturity and duration (>95% fully collateralized) Aimed mid term portfolio size of EUR average interest rate of 4% Successful introduction of flatex flex credit line (technically a 100% collateralized overdraft facility with max 25% LTV on securities held by client) EUR 100m+ credit lines drawn after 12 months Addressing new market participants (B2B2C clients as well as insurance customers) with flex credit Highly collateralized factoring portfolio of currently ~EUR 50m, first-class debtors with top credit ratings such as ALDI, LIDL B2C COLLATERALIZED LOANS EUR 4.5% = EUR +16MN P.A. ALTERNATIVE CREDIT BOOK EUR 3.5% = EUR +5MN P.A mid term ambition 19

20 5.5 Growth strategy the hidden treasury reserve Customers maintain currently more than EUR 1bn with FinTech Group Bank AG (overnight trading money), thereof around EUR 800m is managed in a treasury portfolio Current management set up treasury strategy, despite low (negative) interest environment in Europe treasury portfolio is profitable and highly diversified (sovereign, municipal bonds and corporate bonds), yielding around 0.2% interest FinTech Group has never paid interest rates on customer deposits to customers Hidden reserve: increase in interest rate environment will have enormous impact on P&L: 1% increase +EUR 10 million EBT HIDDEN RESERVE: P&L IMPACT DUE TO CHANGE OF INTEREST ENVIRONMENT.. 30 Cash Deposits as of Incremental EBT % 1.0% 0.5% Customer deposits 20

21 7. The FinTech Group AG - shareholder structure GFBK (Entity of flatex founder Bernd Förtsch) 35,57% 30,10% 0,57% 0,86% 1,02% 1,31% 15,90% 1,72% 6,87% 2,97% 3,12% Other and free float (Holding <0.5%) 21

22 Annex

23 Our business model at a glance ONLINE BROKERAGE WHITE LABEL BANKING SERVICES CREDIT & TREASURY Germany & Austria Banking Transaction Portfolio Products 230k retail clients > 9m security transactions Broad product portfolio (including stocks, bonds, ETPs, ETFs, various funds) 100% of value chain in-house (technology, banking, regulatory) Core banking system White Label Banking Services (account opening and admin., call center etc.) Reporting systems (client, regulatory etc.) Trading system Market maker system Trading platforms Market and price data supply EUR 1bn deposits of clients EUR 180m loan 4% NIM Aimed portfolio size by EOY17: EUR 250m Substantial hidden reserve in treasury portfolio today: EUR 0.2% = EUR 2m NII potentail (increase in interest environment): EUR 1.2% = EUR 12m NII Revenue contribution 65 70% 20 25% 5 10% EBIT margin ~ 45% ~ 20% ~ 100% Peer group 23

24 History of FinTech Group Key Miletones Company founded in Langen L.O.X. OTC certificate platform developed (limit order system connects DB/Coba flow to 22 pan-european brokers) Full BPO IT provider for bankenverband ever since Full white label Retail Bank operations begins (full BPO) 2001 Development and full BPO provider for pan-european expansion (core banks system FTG:CBS:R1 is born) 2015 Migration of mwb fairtrade from caceis to FinTech Group Bank for order routing and securities settlement (1.4m trades / yr) Best German online broker goes live Largest Austrian bank selects FinTech Group as full BPO for German digital expansion 24

25 Financials at a Glance - Consolidated Group Source: FinTech Group CONTINUOUS REVENUE GROWTH WITH NEW STRATEGY (meur) 100,0+ 34,6 * 40,6 48,3 46,7 H H H H FY 2017E Source: FinTech Group NET PROFIT TURNAROUND ACHIEVED (meur) 16,8+ 10,0 9,8 2,5 H H H H FY 2017E -12,2 SHAREHOLDER VALUE CREATION THROUGH ROE GROWTH 13,6% 16,5%+ AFTER GROUP RESTRUCTURING FOCUS ON EPS 0,73 1,00+ 1 Source: FinTech Group E -2,5% -15,5% Source: FinTech Group E 2017E -0,58-0,99 * H numbers include significant one-off income (reported figure in FY15: EUR 8.3mn) and consolidate only three months XCOM AG / FinTech Group Bank AG (for further information see HY16 financial report note 4) Note: all segment numbers before intersegment consolidation and holding expenses thus sum of segments does not equal Group financials 1 undiluted, based on 16.8m shares outstanding as of 01/04/2017 ANNEX 25

26 Segment Financials at a Glance SECURITIES TRADING AND FINANCIAL SERVICES ONGOING INCREASE IN NUMBER OF RETAIL CLIENTS (k) LEADING B2C-POSITION ENSURES RECURRING REVENUES (meur) Source: FinTech Group 250,0** 212,0 193,8 163,7 176,6 H H H H FY 2017E Source: FinTech Group 25,0+ 21,4 * 11,6 7,1 7,8 H H H H FY 2017E EBITDA INCREASING WITH HIGHER SHARE OF WALLET (meur) EFFICIENT IT AND BANKING ECOSYSTEM DRIVES EBITDA-MARGIN 15,7 * 16,5+ 73,4% * 54,9% 63,8% 57,7% 67,0%+ Source: FinTech Group 7,4 3,9 4,5 H H H H FY 2017E Source: FinTech Group H H H H FY 2017E * H numbers include significant one-off income (reported figure in FY15: EUR 8.3mn) ** includes flatex, ViTrade and further B2C clients Note: all numbers before intersegment consolidation and holding expenses thus sum of segments does not equal Group financials ANNEX 26

27 Segment Financials at a Glance TRANSACTION PROCESSING & WHITE-LABEL BANKING SERVICES STRONG GROWTH IN NUMBER OF SETTLED TRANSACTIONS (m) 12,5 INTENSIFIED SALES ACTIVITIES IMPACT REVENUE GROWTH (meur) 75,0+ Source: FinTech Group 4,8 5,3 5,0 5,5 H H H H FY 2017E Source: FinTech Group 11,8 * 33,4 36,5 34,2 H H H H FY 2017E RESTRUCTURING HAS INCREASED EFFICIENCY AND EBITDA (meur) SCALABLE PRODUCTS AND BPO PUSHES EBITDA-MARGIN Source: FinTech Group 28,5+ 12,3 16,3 2,2 * 6,2 H H H H FY 2017E Source: FinTech Group 40% 15% 47,7% 38,0%+ 33,7% 18,6% * 18,6% H H H H FY 2017E * H numbers consolidate only three months XCOM AG / FinTech Group Bank AG (for further information see HY16 financial report note 4) Note: all numbers before intersegment consolidation and holding expenses thus sum of segments does not equal Group financials ANNEX 27

28 Contact details Frank Niehage CEO FinTech Group AG Rotfeder-Ring Frankfurt, Germany Muhamad Chahrour CFO FinTech Group AG Rotfeder-Ring Frankfurt, Germany