- 2023 profit guidance revised upwards: net profit of 160 million Euro is expected, up from 150 million Euro in February 2023 and the 2022-2024 Business Plan target of 137 million Euro.
- The new progressive dividend policy has been approved, providing for an increase in the payout ratio when the profit threshold required to meet the Bank’s capital needs is exceeded, in accordance with the reference macroeconomic and regulatory context, and the progress of the Business Plan.
- The favourable revenue trend, up 8% compared to the first half of 2022, is supported by the positive correlation of trade receivables to rising interest rates and Bank pricing policy.
- Cash recoveries on Npl portfolios rise to 195 million Euro, up 7,0% compared to the first half of 2022, despite inflationary tensions.
- The credit cost during the half-year, at an all-time low, is 16 million Euro, despite including 14 million Euro of provisions on performing exposures to cover macroeconomic risks.
- The CET1 ratio stands at 15,01%, excluding the profit for the first half of 2023, thereby easily exceeding capital requirements (8,65%).
2023 First half results
Reclassified data – 1 January 2023/30 June 2023
- The Group’s net profit amounts to 91,0 million Euro, up 25,5% from 72,5 million Euro in the first half of 2022.
- The guidance for net profit in 2023 was raised to 160 million Euro, up from the 150 million Euro estimated last February. The new guidance, which is based on the assumption of no extraordinary geopolitical or macroeconomic events and no significant regulatory changes, includes the effects of the increase in the cost of funding and the costs of the integration of Revalea, the Mediobanca group company whose acquisition was announced last May, with closing expected during the fourth quarter of 2023.
- Net banking income, up 7,6% to 348,5 million Euro from 324,0 million Euro in the first half of 2022, benefits from the positive correlation of Commercial & Corporate Banking Segment to rising interest rates and the Bank’s pricing policy. Revenues in the Npl Segment, although broadly stable compared to the first half of 2022, highlight the resilience of funding despite rising inflation.
- Operating costs, at 195,8 million Euro (+5,5% compared to 185,5 million Euro in the first half of 2022), increase due to higher personnel expenses (80,4 million Euro compared to 73,6 million Euro in the first half of 2022), mainly due to the increase in variable remuneration and provisions for the renewal of the collective agreement for bank employees, and higher other administrative expenses (119,2 million Euro compared to 114,6 million Euro in the first half of 2022), which reflect the offsetting of the inflationary effect by careful cost control and continuous efficiency improvements.
- The credit cost is 16,3 million Euro, down by more than 50% compared with the first half of 2022, despite including 14 million Euro of provisions on the performing exposures portfolio to cover potential macroeconomic risks.
- Liquidity position, as at 30 June 2023, is equal to approximately 1,1 billion Euro in reserves and free assets that can be financed by the ECB (LCR above 1.000%).
Capital requirements
- CET1 comes to 15,01% (in line with the figure at 31 December 2022) and TCR to 18,04% (18,82% as at 31 December 2022), calculated excluding the first half 2023 profit.
Milan, 3 August 2023 – The Board of Directors of Banca Ifis met today under the chairmanship of Ernesto Fürstenberg Fassio and approved the results for the first half of 2023.
“The results obtained by the Bank in the first half of 2023 confirm the soundness of a business model that, despite a challenging macroeconomic context, has demonstrated its ability to combine financial sustainability with attention to all stakeholders. During the period, all the main indicators recorded strong growth, leading us to revise our profit estimates for 2023 upwards to 160 million Euro from the 150 million Euro estimated in February 2023, which already exceeded the target of 137 million Euro set forth in the 2022-2024 Business Plan. This result has been achieved thanks also to the positive revenue growth in Commercial & Corporate Banking Segment, supported by the positive correlation with the rise in interest rates, the dynamism of the commercial network and the acceleration of the digitalisation process that has made available new platforms and tools to improve efficiency both in commercial business and in Npls where, during the period, cash recoveries on purchased portfolios amounted to 195 million Euro, up 7% compared to the first half of 2022” – states Frederik Geertman, CEO of Banca Ifis, who adds: “we have already started the funding plan to repay the 2 billion Euro TLTRO, potentially even before the maturity date of September 2024, with the remarketing the senior notes of the leasing securitisation for approximately 400 million Euro and ramping up the Npl securitisation for a further 400 million Euro. In addition to these transactions, there is the approximately 700 million Euro of the proprietary portfolio maturing naturally by September 2024. Repurchase and reverse repurchase transactions on the proprietary portfolio, the increase of retail funding with a multi-channel strategy and senior bond issues are also planned for the coming quarters. Finally, in the first half of 2023, the bank’s prudent lending policy led us to increase the reserves set aside for potential macroeconomic risks by 14 million Euro to a total of 65 million Euro”.
The Commercial & Corporate Banking Segment’s revenues, up 23% compared to the first half of 2022, reflect the Group’s positive correlation to rising interest rates (85% of the commercial loan portfolio is at floating rates). The dynamism of the Group’s commercial network was evidenced by growth rates above those of its reference markets: in the first half of 2023, Factoring turnover grew by 11,3% (compared to 1,1% for the market) and Leasing disbursements grew by 15,1% (compared to 13,1% for the market).
In the Npl Segment, cash recoveries on acquired portfolios amounted to 195 million Euro, up 7,0% on the first half of 2022. To date, judicial and extrajudicial recovery activities do not show any significant negative impact from rising inflation and interest rates.
The digitisation process of Banca Ifis sped up in the first half of 2023. The Group is committed to the implementation of the 2022-2024 D.O.E.S. Business Plan that focuses on innovation and digitisation, through major investments in projects that aim to make the Group’s model increasingly sustainable and efficient. In the Npl Segment, innovative systems have been developed to support acquisition and recovery decision-making strategies; the “Pagochiaro” portal, now extended to all judicial and extrajudicial collections, allows debtors to monitor payments and the Group to reconcile collections more efficiently. In the Commercial & Corporate Banking Segment, a new platform was developed to support analysts in their credit evaluation and deliberation activities, and a new digital multi-product sales platform “Next” opened to customers and physical agent networks.
The portfolio owned in the Governance & Services and Non-Core Segment benefited from the purchase, during the fourth quarter of 2022, of a portfolio of debt securities issued by leading European financial and corporate institutions with a particularly attractive risk-return ratio.
At 2,76%, the average cost of funding in the second quarter of 2023 is up from 2,24% in the first quarter of 2023 and in line with estimates. The liquidity position, as at 30 June 2023, amounts to approximately 1,1 billion Euro and is substantially in line with the average of previous quarters.
Asset quality ratios, the Gross Npe Ratio and the Net Npe Ratio stand respectively at 5,9% and 3,9%. These figures would come in respectively at 4,5% and 2,4% excluding reclassifications resulting from the application of the New Definition of Default regulations to receivables from the National Health System (NHS), which are characterised by limited credit risk and long payment terms.
Capital ratios confirm the strong strength of both the Bank and the Group. Both the main indicators remain well above the minimum required levels, with a consolidated CET1 Ratio of 15,01% (in line with the figure at 31 December 2022) and a consolidated Total Capital Ratio of 18,04% (18,82% as at 31 December 2022), calculated excluding profits for the first half of 2023.
New Dividend Policy
At the same time as approving the results for the first half of 2023, the Board of Directors approved Banca Ifis’s new shareholder remuneration policy. The Dividend Policy provides for a progressive mechanism with an increase in the payout ratio when the threshold of earnings needed to meet the Bank’s capital requirements (retained earnings) is exceeded, in accordance with the reference macroeconomic and regulatory context and the progress of the Business Plan in force over time. The Board may propose to the Shareholders’ Meeting to distribute a portion of the Bank’s net profit for the year up to 50% of the consolidated net profit attributable to Banca Ifis up to the Materiality Threshold identified when defining the annual budget and 100% of the consolidated net profit attributable to Banca Ifis in excess of the Materiality Threshold. The Materiality Threshold, for 2023, is set at 100 million Euro. This is without prejudice, in any case, to the Board’s full discretion in defining, on a case-by-case basis, the dividend distribution proposal to be submitted to the Shareholders’ Meeting, in accordance with Article 28 CRR.
TCFD Report
Within the framework of ESG activities, the Board of Directors of Banca Ifis has approved the first edition of the TCFD Report, the report presenting useful information for investors and stakeholders to correctly assess Banca Ifis’s climate-related risks and opportunities. The document, drawn up on a voluntary basis and aligned with the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD), created on the initiative of the Financial Stability Board, further expands the Group’s ESG reporting, representing, among other projects, the strategy to reduce emissions financed on the credit portfolio that the Bank has defined by joining, first in Italy, the Net-Zero Banking Alliance (NZBA), the initiative promoted by the United Nations to accelerate the sustainable transition of the international banking sector.
The full document is available on the Banca Ifis website at: https://www.bancaifis.it/en/our-sustainability/environment/tcfd-report/
