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08/02/2024
18:05

Banca Ifis: net profit for 2023 up to 160 million Euro (+13,5%). Proposed distribution resolved of a final dividend in the amount of 47 million Euro

SDIR: REGEM 2.2
Privileged information
  • The 2023 net profit, net of PPA, represents an all-time record for the Bank. This is 16,8% higher than the target of 137 million Euro profit set for 2023 in the Group Business Plan.
  • The net profit target for 2024 of around 160 million Euro has been confirmed, in line with the forecasts given in the 2022-24 Business Plan.
  • The favourable revenue trend, up 3,5% compared with 2022, is supported by the positive performance of the commercial business and the positive correlation of trade receivables to rising interest rates.
  • Cash recoveries on Npl portfolios rise to 397 million Euro, up 3,6% compared to 2022, despite inflationary tensions.
  • The CET1 ratio stands at 14,87%, thereby easily exceeding capital requirements (9,0%).
  • Total dividend of 110 million Euro for 2023 (2,1 Euro per share), 60% higher than the Business Plan targets, of which 63 million Euro (1,2 Euro per share) will be distributed on 22 November 2023 and 47 million Euro (0,90 Euro per share) on 22 May 2024.
  • More than 30 initiatives have been realised through the Social Impact Lab Kaleidos to contribute to individual and social well-being and sustainability in the Country with a total investment of 7 million Euro over the three-year period 2022-2024.

FY 2023 preliminary results

Reclassified data – 1 January 2023/31 December 2023

  • The Group’s net profit amounts to 160,1 million Euro, up 13,5% from 141,1 million Euro in 2022.
  • Net banking income, up 3,5% to 704,6 million Euro from 680,5 million Euro in 2022, benefits from the positive correlation of Commercial & Corporate Banking Segment (+8,2% compared with 2022) to rising interest rates. Cash recoveries on Npl portfolios rise to 397 million Euro, up 3,6% compared to 2022, confirming the resilience of funding despite the rise in inflation.
  • Operating costs, at 405,8 million Euro (+4,0% compared to 390,4 million Euro in 2022), increase due to higher personnel expenses (163,8 million Euro compared to 150,8 million Euro in 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 (249,4 million Euro compared to 242,4 million Euro in 2022). The modest increase confirms the offsetting of the inflationary effect by careful cost control and continuous efficiency improvements.
  • The credit cost is 52,4 million Euro, down by more than 32% compared with 2022, and includes 14 million Euro of provisions on the performing exposures portfolio to cover potential macroeconomic risks.
  • Liquidity position at 31 December 2023 is equal to approximately 1,4 billion Euro in reserves and free assets that can be financed by the ECB (LCR above 1.100%).

In January 2024, the Banca Ifis Group was notified of the new SREP requirements by the Bank of Italy. The new requirements provide for a CET1 of 9,0% a Tier 1 Ratio of 10,90% and a Total Capital Ratio of 13,30% (including 1,0% P2G) and will apply starting 31 March 2024. As at 31 December 2023, the SREP requirements were: CET1 8,65%, aTier 1 ratio of 10,50% and Total Capital Ratio 12,9% (including 0,75% P2G).

Reclassifications and aggregations of the consolidated income statement concern the following:

  • net credit risk losses/reversals of the Npl Segment are reclassified to interest receivable and similar income (and therefore to “Net interest income”) to the extent to which they represent the operations of this business and are an integral part of the return on the investment;
  • net allocations to provisions for risks and charges are excluded from the calculation of “Operating costs”;
  • cost and revenue items deemed as “non-recurring” (e.g. because they are directly or indirectly related to business combination transactions, such as the “gain on a bargain purchase” in accordance with IFRS 3), are excluded from the calculation of “Operating costs”, and are therefore reversed from the respective items as per Bank of Italy Circular 262 (e.g. “Other administrative expenses”, “Other operating income/expenses”) and included in a specific item “Non-recurring expenses and income”;
  • the following is included under the single item “Net credit risk losses/reversals”:
    • net credit risk losses/reversals relating to financial assets measured at amortised cost (with the exception of those relating to the Npl Segment mentioned above) and to financial assets measured at fair value through other comprehensive income;
    • net allocations to provisions for risks and charges for credit risk relating to commitments and guarantees granted;
    • profits (losses) from the sale/repurchase of loans at amortised cost other than those of the Npl Segment.

Capital requirements

  • The CET1 is 14,87% (15,01% at 31 December 2022) and the TCR is 17,44% (18,82% at 31 December 2022). Both have been calculated including the profits generated by the Banking Group in 2023, net of dividends.

Rome, 8 February 2024 – The Board of Directors of Banca Ifis met today under the chairmanship of Ernesto Fürstenberg Fassio and approved the 2023 preliminary results.

“In 2023, Banca Ifis once again achieved positive results in the economic-financial profile, with a significant increase in all profitability indicators: in these two years of the Industrial Plan, our Institute achieved 300 million euros of cumulative profit, distributing about 185 million euros to shareholders. Positive results have also been reached in respect of industrial matters, with the acceleration on the digitalisation front; and in sustainability, particularly social, by increasing planned investments and implementing more than 30 high-impact projects for the well-being of communities and the individual and social sustainability of the Country, through the Social Impact Lab Kaleidos. These results point us towards a double bottom line approach in which profit generation is accompanied by the creation of positive impacts on society. Thanks to this approach, the Bank ensures concrete support to small and medium-sized enterprises in the ESG transition process and returns value to the communities in which it operates”, says Ernesto Fürstenberg Fassio, Chairman of Banca Ifis.

“2023 for Banca Ifis closed with a net profit of 160 million Euro, which, net of PPA, represents an all-time high for the Bank and was mainly driven by the favourable revenue trend and the modest credit risk. We thus achieve one year in advance the result expected for the third year of the Industrial Plan. During the period, we continued the operational and digital transformation process outlined in the Industrial Plan, releasing new innovative solutions aimed at making processes more efficient and improving services and customer support. Our prudent approach to risk management, the now very advanced digital transformation of our business model and our authority in our target markets, based on the expertise of our IfisPeople, allow us to look forward with confidence. We therefore confirm our target of around 160 million Euro in profit for FY 2024, in the absence of macroeconomic shocks, despite the slowdown in growth and a higher cost of funding“, says Frederik Geertman, CEO of Banca Ifis.

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The Commercial & Corporate Banking Segment’s revenues, up 8,2% compared to 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 has allowed business to grow despite lower demand for credit due to higher interest rates: in 2023, Factoring turnover grew by 1,4% and Leasing disbursements by 4,0%. During the period, the digitalisation path was accelerated with the evolution of “Ifis4Business” into the new multi-product platform “myIfis”, to make the relationship between the sales network and end customers more effective and fluid. The Bank has developed new products and solutions aimed at supporting the sustainable transition and digitisation of Italian SMEs. With this in mind, the commercial offer was expanded with new leasing solutions in the car, alternative green mobility and sustainable energy segments, and a new tech rental product dedicated to private customers.

In the Npl Segment, cash recoveries on acquired portfolios amounted to 397 million Euro, up 3,6% on 2022. To date, judicial and extrajudicial recovery activities do not show any significant negative impact from rising inflation and interest rates. In line with the expected timing, last 31 October, having obtained the necessary regulatory approvals, the acquisition of Revalea was completed and the long-term partnership for the management of non-performing loans, signed back in May 2023 with the Mediobanca Group and aimed at consolidating Banca Ifis’s position as a key player in the market for non-performing loans in the small-ticket unsecured segment.

The average cost of funding in 2023, at 2,89%, is up from 0,96% in 2022. The liquidity position at 31 December 2023 was approximately 1,4 billion Euro, despite the redemption of 500 million Euro in TLRO in December 2023.

In December, ahead of the September 2024 maturity date, the Bank repaid 500 million Euro of TLTROs and has already completed well in advance many of the actions to repay the remaining 1,5 billion Euro of TLTROs. The actions completed included the remarketing of the senior notes of the leasing securitisation for approximately 400 million Euro, the ramp-up of the Npl securitisation for a further 400 million Euro and the issuance of a senior bond for 300 million Euro. In addition to these transactions, there is the approximately 600 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, in the event of favourable financial markets, senior bond issues are also planned for the coming quarters.

Asset quality ratios, the Gross Npe Ratio and the Net Npe Ratio, stand respectively at 5,5% and 3,2%. These figures would come in respectively at 4,5% and 2,3% 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. The ratio of net non-performing loans to net loans improved significantly to 3,2% from 4,0% at end-2022. The coverage of non-performing loans was further strengthened from 35% in 2022 to 43% in 2023. In particular, the coverage of bad loans was increased from 69% in 2022 to 78% in 2023 and that of unlikely to pay from 39% in 2022 to 44% in 2023.

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 14,87% (15,01% at 31 December 2022) and a consolidated Total Capital Ratio of 17,44% (18,82% at 31 December 2022), calculated including 2023 profits, net of the dividend.

The Bank’s Board of Directors has approved the proposal to distribute a balance on the dividend for 2023 for a total of 47 million Euro, equal to 0,9 Euro per outstanding share, gross of any legal withholdings, which will be paid with an ex-dividend date of 20 May 2024, a record date of 21 May 2024 and a payment date of 22 May 2024. On the occasion of the presentation of the results for the nine months of 2023, the Bank had resolved to distribute an interim dividend for 2023 in the amount of 63 million Euro, i.e. 1,2 Euro per outstanding share, gross of any withholding taxes. For the full year 2023, the Bank plans to distribute 110 million Euro in dividends, equivalent to 2,1 Euro per outstanding share, consistent with the new dividend policy approved last year.

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Banca Ifis’s commitment to the social agenda and to environmental sustainability and governance

In 2023, in line with the investment plan announced at the time of the Business Plan, Banca Ifis strengthened its commitment to the implementation of the social agenda directed by the Presidency by realising, through the Social Impact Lab Kaleidos, more than 30 projects and increasing, with the donation of 1 million Euro to the Banco Alimentare Onlus Foundation, which took place in December 2023, the overall budget dedicated to it, from 6 to 7 million Euro over the 2022-2024 Plan period. It is a concrete commitment thanks to which the Bank was awarded the Areté Prize for Responsible Financial Communication at the CSR and Social Innovation Fair.

This commitment took concrete form through initiatives aimed at employees – in particular in diversity and inclusion projects that led the Bank to obtain the UNI PdR 125:2022 certification and to publish its first Diversity and Inclusion Policy. On the business side, strengthening the Bank’s traditional ethical and sustainable recovery model in the Npl business to facilitate the financial re-inclusion of individuals and families, with particular attention to the most fragile categories. In this regard, the Bank executed an international benchmarking to identify a system of tools, methodologies and good practices for sustainable credit recovery, including through. Finally, commitment was shown towards the communities through the three areas of Kaleidos: inclusion, culture and territory, and people’s well-being.

In order to better quantify the impact created by the activities of Kaleidos, Banca Ifis has completed the development, in collaboration with the Polytechnic University of Milan, of a model for measuring the impact on the community generated by the social activities promoted or supported by the Bank, making it possible to grasp even more clearly the positive effects that show how, on average, every Euro invested in sustainability initiatives has been transformed into 3,9 Euro of economic value for the community.

In the area of social inclusion, the Bank continued to support high value-added initiatives, for example towards associations such as CAF, which takes in and supports disadvantaged young people, the Don Gino Rigoldi Foundation, which supports families in socio-economic difficulty, and Articolo 3, which operates in Bollate prison.

In terms of medical-scientific research, another pillar of the corporate agenda, the Bank has supported the Bambino Gesù Children’s Hospital for research into innovative therapies to fight malignant tumours of the central nervous system affecting children and young adults, and the Venetian Institute of Molecular Medicine (VIMM) with the “Adopt a Researcher” initiative of the Advanced Biomedical Research socially-useful non-profit foundation.

The Bank has also confirmed its commitment to nationwide projects in culture and sport, including through dedicated observatories that show opportunities and benefits, both economic and social, for the benefit of all stakeholders. In culture, expanding the “Economy of Beauty”, the platform that enhances Italy’s heritage not only in the more traditional sectors such as nature and landscape, but also in entrepreneurship and know-how, through the activities of the SMEs that the Bank supports with its products and services. As part of its 40th anniversary celebrations, inside the 16th-century Villa Fürstenberg in Mestre, the Bank inaugurated the “International Sculpture Park”, a permanent exhibition of monumental sculptures that will be open to the public from next April. It is an example of the social economy way of banking.

In sport, the “Italian Sport System Observatory” project photographs the value of this specific ecosystem and its contribution to the Country’s development. In line with Kaleidos’s mission, the Bank has supported young people through numerous initiatives such as donating scholarships to CONI junior medal-winning athletes.

The Bank’s commitment also continued on the environmental front, having been the first in Italy to join the Net Zero Banking Alliance (NZBA) – the United Nations initiative that aims to accelerate the sustainable transition of the banking sector by zeroing the net emissions of the lending portfolio by 2050 – the Bank has continued to monitor the reduction targets for the loan portfolio by 2030, covering more than 80% of the financed exposures and emissions considered by the NZBA. To support SMEs on the path to sustainable transformation, the Bank has launched a series of products to facilitate customers’ energy transition, such as leasing for electric posts and removable photovoltaic systems, as well as a rental solution for e-bike fleets. Partly in light of the Bank of Italy’s supervisory expectations, the Bank has developed numerous projects on environmental issues, starting with the integration of ESG criteria into its credit and risk management processes, up to the publication of the first Report aligned with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

Finally, on the governance front, the Bank confirmed the “A” rating assigned by MSCI and launched a series of activities aimed at strengthening its presence and positioning in the main international sustainability indices.

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Today, the Board of Directors also took note of the resignation submitted from the sole role of director by the Founder Sebastien Egon Fürstenberg, who declared his intention to dedicate himself full time to the Honorary Presidency assigned to him by the Shareholders’ Meeting on 20 April 2023.

The replacement of the resigning Founder and advisor will be the subject of future deliberations, with the support and preventive assessments of the Appointments Committee.

Sebastien Egon Fürstenberg has also ensured his commitment to the punctual fulfillment of the tasks assigned to him by the company statute as Honorary President in the future.