Financial Services Technologies

Transcription

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

2 1.1 The FinTech Group AG - key facts CORPORATE FACTS AND FIGURES ONGOING TRANSFORMATION OF CORPORATE STRUCTURE Headquarters Offices Employees Number of own B2C customers Number of managed accounts Trades executed p.a. Frankfurt Willich, Zwickau, Berlin, Andernach, Düsseldorf, Kulmbach, Wien approx. 500 > 230,000 > 280,000 > 10 million CORPORATE STRUCTURE TODAY 100% 100% XCOM Finanz GmbH (100%) Assets under administration > EUR 11 billion Customer cash deposits ~ EUR 1 billion Number of B2B clients Tier 1 Capital CRR > 100 > EUR 40 million > 10 AS OF Q Tech-Entity Fin-Entity 100% 2

3 1.3 FinTech Group AG - stock Shares outstanding: 16.8m Options outstanding: max. 1.6m Market capitalization: EUR 375m (as of 10/10/17) Share Price (EUR) 22 Aug 2017 PT EUR Commerzbank STOCKPRICE DEVELOPMENT LAST 6M Listed: ISIN: Bloomberg: Scale, Börse Frankfurt DE000FTG1111 FTK GR Equity Aug 2017 PT EUR M.M. Warburg Aug 2017 PT EUR H&A 14 Stock covered by

4 1.4 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 4

5 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 Guaranteed pricing model for more than 11 years: EUR EUR 5.00 Market leading ETP offering with Morgan Stanley partnership, open architecture offering: Commerzbank, Deutsche Bank, Citi, BNP 5

6 2.2 B2C - development of brokerage KPIs A GROWING NUMBER OF BROKERAGE CUSTOMERS (IN K) NUMBER OF RETAIL TRANSACTIONS (IN M) 12,5 280,0 205,5 9,2 175,4 7,7 Source: FinTech Group 134,4 149,6 Source: FinTech Group 5,8 7,1 FY 2014 FY 2015 FY 2016 FY 2017E Mid Term FY 2014 FY 2015 FY 2016 FY 2017E Mid Term 6

7 2.3 B2C - growth drivers 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 (>40 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) 7

8 2.4 B2C disruptive ETP partnership with MS 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 8

9 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 9

10 3.2 B2B client excerpt and case studies FinTech Group developed, maintains and runs LOX, the ETP OTC system for Deutsche Bank and Commerzbank, connected to 17 European brokerage companies - 3bn price feeds and 50k transactions - per day! FinTech Bank runs and manages the online retail banking business for pbb direct (on pbb balance sheet), from account opening and call centre services to annual tax forms FinTech was chosen by Equatex one of two leading stock option plan adminstrators in Germany with > EUR 3bn AuC to provide transaction and custody services; FinTech opened 250k accounts for Equatex within 2 weeks 10

11 3.3 FinTech Group core banking system 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 Order mgmt. / routing Clearing / settlement Card management ATMs, cash logistics Money and unit booking Tax processing Corporate actions 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. 11

12 UNIQUE COMBINATION OF INDEPENDENT BUSINESS MODELS B2C - Brokerage High margin business Volatile business model Heavily depending on capital markets and customer behavior Less predictive revenue streams OPEX driven B2B - White label banking & IT services Stable long term contracts Very low volatility Lower margin than B2C business Highly predictable revenue streams CAPEX driven 12

13 4.1 The ecosystem B2B Reduce costs Leverage synergies B2C Access to new partner GROWTH Expand product portfolio Increase profitability Increase transactions Improve customer value "customer journey" 13

14 4.2 The ecosystem case study Zinspilot B2B Flatex clients have moved EUR 200m to Zinspilot Satisfied B2B client, received EUR 200m without any additional marketing costs B2C Online platform providing clients with best available interest rates offered by European banks B2B client receiving white label banking services (account management, payment and regulation) Flatex clients can now receive interest Satisfied B2C clients, receiving now interest rates on their deposits Benefit for FinTech Group Saving -0.4% on EUR 200m (previously parked with ECB) Earning 0.1% commission on EUR 200m from Zinspilot EUR 1m EBT by leveraging ecosystem Clients maintain EUR 1.2bn overnight trading money Demand by few customers for interest on deposits However, flatex has never paid interest on customer deposits 14

15 5.1 FinTech Group Bank at a glance* Number of Accounts Customer Deposits Securities under Custody Number of exchanges and OTC-partners Executed Trades Executed Trade Volume 287 k 929 m 10.3 bn m 38 bn Executed Number of Payments Executed Payment Volume Credit Book (collateralized) Average Interest Rate (Loan Book) TIER-1 Capital Return on Equity (before Tax) 3.3 m 5.5 bn 186 m 4.3% p.a. 41 m 22% * As of

16 5.2 Credit & Treasury leveraging cash deposits setting-up a credit portfolio, diversified over risk, maturity and duration (>90% fully collateralized) aimed portfolio size of EUR average interest rate of 4% by EOY17 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 Highly collateralized factoring portfolio of currently ~EUR 50m, first-class debtors with top credit ratings such as ALDI, LIDL B2C COLLATERALIZED LOANS EUR 3.9% = EUR +6MN P.A. ALTERNATIVE CREDIT BOOK EUR 3.5% = EUR +4MN P.A. in EUR million

17 5.3 Credit & Treasury the hidden 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 17

18 6.1 Our track record and mid-term ambition Improved tech expertise by XCOM acquisition Strengthened capital base Implemented high class management team and subsequent restructuring actions Closed CFD deal with Commerzbank (strategic partnership) Group wide IFRS Reporting (incl. segment reports) Boost of organic growth of existing B2C business Sale of loss making AKTIONÄRSBANK, improve annual earnings and pool 75.2 banking activities in FinTech Group Bank AG 95.0 >100.0 Implement technology based lending and redeveloping treasury with the potential to generate an additional EUR 10+ million (do-ityourself and / or partner with existing players) Enter Prime Standard of Frankfurt Stock Exchange to increase transparency and trading volume Further strategic acquisitions & partnerships >150.0 >50.0 EUR million Net Sales EBITDA Net Profit > > a 2015a 2016a 2017e Mid-term ambition 18

19 6.1 and 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 LEVERAGE OWN USED VALUE CHAIN BY PROVIDING IT TO THIRD PARTY B2B CLIENTS USE FREE LIQUIDITY TO GROW THE FULLY COLLATERALIZED CREDIT BOOK WHY: increasing number of transactions drive revenues but also reduce cost of settlement (achieve economies of scale) HOW: Continuous growth in domestic flatex markets Geographical expansion with flatex Allow non-flatex customers to enjoy flatex products (new product: TradeNow) Increase number of settled transactions for third parties Potential for price increases 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 WHY: making use of part of the zero-cost liquidity allows for additional income on a zero-risk base (utilizing the by-product) How: Increase credit volume with own flatex clients Set-Up of credit products for B2B2C clients (Equatex flex credit) Provide credit products to non-fintech clients (flex-insurance credit) Maintain a fully collateralized approach 19

20 6.2 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 online brokerage business in the German speaking DACH region by penetrating Switzerland Current average trading fee for clients: SFR Potential to enter the market with SFR/trade 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 compared by leveraging our EU-Passport Currently operating Next step Potential markets 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 highly focused and experienced management team to generate higher profits 20

21 6.3 Growth strategy B2B Acquire three to five B2B mandates every year B2B - White Label Banking/IT Services ORGANIC GROWTH STRATEGY Each new mandate will contribute a contract lifetime revenue of EUR 5-10 million Make use of current regulatory and political environment (Brexit) to attract new B2B clients Continue focus on transaction settlement and offering settlement as a service to small and mid sized banks with inefficient back offices Clear strategy to become Europe s leading transaction processor by offering own-used value chain to third parties Increase mid-term the number of settled transaction for third parties from currently 1.5 million to 3 million 21

22 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%) 22

23 Annex

24 Our business model at a glance ONLINE BROKERAGE WHITE LABEL BANKING SERVICES CREDIT & TREASURY Germany & Austria Banking Transaction Portfolio 230k retail clients Core banking system Trading system EUR 1bn deposits of clients Products > 9m security transactions Broad product portfolio (including stocks, bonds, ETPs, ETFs, various funds) 100% of value chain in-house (technology, banking, regulatory) White Label Banking Services (account opening and admin., call center etc.) Reporting systems (client, regulatory etc.) Market maker system Trading platforms Market and price data supply 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 24

25 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 25

26 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 26

27 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 27

28 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 28

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