Annual Integrated Report 2021

The economic recovery in Western countries was supported by expansionary fiscal and monetary policies. The ample liquidity available and extraordinarily low interest rates were a favourable context for international financial markets, which achieved significant gains during the year. The Next Generation EU plan is expected to offer considerable support for Italy. 

However, the current economic and financial outlook is severely conditioned by the tensions surrounding the conflict between Russia and Ukraine, which resulted in threats of war on the border of the European Union itself, as had not occurred since the fall of the Berlin Wall. In a few days from its outbreak, the conflict had already revolutionised expectations and resulted in a completely new geopolitical and economic framework. On the economic front a possible stagflation scenario is taking shape, in which upwards pressure on energy prices and the related inflationary tensions could go hand-in-hand with more tolerant monetary policies in view of declining growth and worsening asset quality. Financial markets have understandably reflected the gravity of the situation and the uncertainty of the path towards a resolution with significant declines in stock exchanges at the international level.

In this scenario, we are even more aware of the importance of Banca Generali’s role in meeting the investment protection needs of its customers and in in steering and guiding them in their financial planning choices at such a complex time. As it always has been, Banca Generali is poised to rise to this new challenge, secure in the knowledge that it can count on the experience and professionalism of its Financial Advisors and all the Bank’s personnel. It is no coincidence that over the past two years, shaped by the Covid-19 pandemic, Banca Generali has presented significant growth rates. The pandemic heightened demand for financial advice from households and rewarded service models based on flexibility and digitalisation. Harnessing these strengths, Banca Generali expedited its growth, fully achieving the ambitious goals of its 2019-2021 Industrial Plan. Business expansion, development of sustainable profitability and confirmation of generous shareholder remuneration were the strategic guidelines of reference. I am proud to be able to state that all our goals have not only been achieved, but far exceeded.

 In fact, in 2021 the Bank reported its best net inflow performance of all time, 7.7 billion euros, bringing total assets to 85.7 billion euros, exceeding the target of 76-80 billion euros set in the plan. During the three years, total inflows amounted to 18.7 billion euros, 76% of which was achieved organically, bearing out the quality and solidity of development. Growth was also evenly distributed between existing customers and acquisition of new customers, confirming the quality of the service model and the professionalism of distribution.

 At the level of results, the Bank succeeded in improving its profitability, thanks to innovation and diversification of its range of products and services, while maintaining careful cost discipline. All this strongly reinforced the sustainability of its business model. Profits reached an all-time high of 323 million euros, despite the prudential initiative of 80 million euros, taken to protect customers against a potential loss relating to investments in securitised healthcare receivables reserved for professional clients. 

The progressive normalisation of the economic and social context in 2021 led the banking authorities to lift the restrictions on the distribution of dividends from Italian and European banks. Banca Generali was thus able to distribute prior dividends relating to the years 2019-20, standing out as one of the most generous banks in Italy. The Bank distributed 2.7 euros per share in the fourth quarter of 2021, with an implicit yield of 6.5%. An additional 0.6 euros per share was distributed in the first quarter of 2022. This was in addition to the proposal to distribute a dividend of 1.95 euros per share from 2021 profits, with an implicit payout ratio of 70.5%. Overall, the Bank thus distributed total dividends of over 600 million euros during the three years, while maintaining a solid capital position reflected in the level of balance sheet ratios far in excess of the requirements set by the monetary Authorities. 

The strength of the financial results, combined with the favourable situation on financial markets — and equity markets in particular — drove the price of the shares up 42.3% during the year. If we also consider the dividends distributed during the calendar year, the Total Shareholder Return (TSR) for the year amounts to a significant 52.0%. In both cases, Banca Generali’s performance far exceeds that of the FTSE MIB Italy and the Italian and European banking sector. 

The stronger results and share performance were accompanied by a considerable number of awards that recognised the quality of the people who work at the Bank and the service it offers its customers. Among others, for the seventh consecutive year the company was named the “Best Financial Advisors Network by Customer Satisfaction” in the independent judgement of the Deutsche Institut für Qualität und Finanzen: important recognition in terms of its customer experience in Italy. For the fourth time in the last five years, Banca Generali received the important “Best Private Bank in Italy” award from the Financial Times Group, attesting to the quality and uniqueness of its development process in financial and household advisory services. Also important were first place overall in traditional management schemes and second place among green management schemes, also according to the Deutsche Institut für Qualität und Finanzen. I would also like to mention the award for “Best Private Bank in Europe for Use of Technology” at the 2021 Wealth Tech Awards for leveraging technology to facilitate and strengthen the relationship between Financial Advisor and customer. 

Among the numerous awards and prizes received, special mention goes out to those obtained for sustainability, where Banca Generali reaped the fruits of the considerable work done during the year. The Bank came in at the top of the rankings by ESG rating assigned by two major ESG ratings agencies: according to Sustainalytics it is among the top 100 at the global level and number six in the Diversified Financials sub-industry, whereas Standard Ethics raised its rating to EE (strong). I would also like to note that Banca Generali joined the MIB ESG index, which includes the top Italian listed companies on the basis of the ESG positioning. On the basis of these awards, the internal policies on ESG governance were thoroughly revised (policies concerning the integration of ESG factors into key business processes, such as investment policies, were significantly enhanced), and the constant striving towards innovation of the commercial range on ESG issues was appreciated. At year-end, sustainable solutions already made up 14% of all managed solutions offered to customers. Our ESG solutions are compliant with the SFDR, which entered into force in March 2021. 

Banca Generali’s commitment to raising awareness for a sustainable transition also extended to the investment arena, focusing on conveying this message to the general public through specific initiatives. The Bank thus launched projects closely tied to the UN 2030 Agenda with a public education focus. The first of these to see the light was #BG4SDGs, a series of meetings dedicated to shedding light on the progress of the individual SDGs identified by the United Nations through addresses by highly authoritative speakers who laid out the challenges and ingredients of competitiveness required to meet environmental and social commitments. The project continued in September 2021 with “BG4SDGs – Time to Change” with the precious collaboration of Stefano Guindani. The project takes an innovative approach to presenting some virtuous examples of man’s actions in response to situations of extreme difficulty from a social and environmental perspective. The initiative — which is still ongoing — is based on seeking dialogue with the youngest through interactive photographic and video content on social media, with positive feedback from the various media and users. 

The Bank’s commitment to sustainability does not concern only operational processes and communications initiatives to raise awareness on the evolution of its issues, but also takes the form of concrete projects benefiting the community. Among these, we are proud of the numerous initiatives launched in the community by our Financial Advisors to promote the awareness and importance of sustainable investment instruments and the impact they may have. These were in addition to the support for the Italian Banking Association Foundation for Financial Education (FEDUF), which we assisted with the project “Un Salvadanaio Per Amico” (“A Piggy-Bank for a Friend”), involving participation in full-fledged lessons on the rudiments of savings and financial instruments for children and young adults. 

The continuation of the pandemic in 2021 also led us to accelerate the “Next-Normal” project, one of the first agreements in the banking world to introduce a hybrid working model with an increasing focus on the principles of work-life balance. This new approach continued hand-in-hand with a new, more integrated method of developing, training and managing people, both through centrally managed activities and specific initiatives by individual departments. 

Finally, in 2021 a new edition of the Generali Global Engagement Survey was held, yielding excellent results of which we are proud and that show a response rate for the Banca Generali Group of 96% and an increase in the engagement score to 84%, bearing out how strongly the Bank’s employees share its goals and values. 

In conclusion, I would like to offer my heartfelt thanks to our Financial Advisors and Employees, whose professionalism in assisting customers and dedication to the Bank made it possible to reach the important milestones in terms of growth and value creation that we have seen. I would also like to thank CEO Gian Maria Mossa and his management team for their attentive leadership and strategic vision, as well as my colleagues on the Board of Directors for the extraordinary commitment shown by their openness, competence and focus on the Bank’s projects. I would like to end with a thought for all those involved in the unexpected conflict between Russia and Ukraine, and in particular to divided families and those who have lost their dear ones, with the hope that mediation can be found as soon as possible to put an end to the fighting and to the further sacrifice of human lives.