Results first half of 2020
Reclassified data – 1 January 2020/30 June 2020
Capital requirements with the consolidation within La Scogliera
Capital requirements without the consolidation within La Scogliera
“The first half of the year has confirmed the validity of the strategy and financial solidity of Banca Ifis, in an absolutely unprecedented macroeconomic context. During the year of the Covid-19 pandemic, one of the worst in recent decades, Banca Ifis closes the first half showing a profit, strengthening its equity and speeding up investments”, Luciano Colombini, Chief Executive Officer of Banca Ifis, explains. “Even in this difficult outlook, the Bank has shown considerable resilience thanks to the specificity of its business model, based, on the Enterprise front, on the disbursement of mainly short-term loans and, on the Npl side, on the definition of sustainable repayment plans, with an average term of approximately 7 years.
During the first six months, the Bank recorded net profit of 37 million Euro, net of adjustments and impairment for 36 million Euro (pre-tax) reasonably to be considered as a result of the Covid-19. Moreover, the lock-down and closure of the courts led to a slow-down of the Commercial & Corporate Banking Segment business and of the Npl segment collection business, thereby generating additional direct and indirect impacts.
Consolidated CET1, calculated excluding the 2019 dividend, which was suspended on the instruction of the Bank of Italy and, for the sake of prudence, excluding profits of the first half of 2020, came to 11,58%, up 62 basis points on 31 December 2019. The same ratio, without considering the effects of the regulatory consolidation into La Scogliera, would be 15,45% (14,28% as at 31 December 2019). Funding remained stable in both the retail and institutional components. I would like to point out that during the half-year, despite the macroeconomic uncertainty, Banca Ifis in any case speeded up the innovation and digital transformation of the business and operative model and, with respect to the forecasts given at the start of the year, expects to increase investments in digitisation.
Over the last few months, the Group has never stopped operating efficiently and with real faith. Amidst the lock-down, we successfully completed a strategic deal, acquiring 70,77% of Farbanca, a transaction that will, thanks to the synergies with Credifarma, allow us to create a leading pole in loans to pharmacies; additionally, late June, we completed an important rebranding project that will improve the Bank’s positioning and assure a better communication of our business and products. During the period, certain operations were completed, such as the sale of the property in Corso Venezia, Milan, which resulted in a capital gain of 24,2 million Euro and the issue of a bond worth 400 million Euro at more favourable conditions than originally expected and which, in the current market context, are no longer feasible. We have also diversified funding, exporting our offer of deposit accounts on the German savings market, thanks to an agreement with the fintech Raisin.
On the Commercial side, we guaranteed businesses our support, approving more than 98% of the more than 18.000 moratorium applications received. We stipulated an important agreement with the EIB whereby to finance and support the SMEs impacted by the Covid-19. And this latter measure, which comes in addition to the numerous activities and services made available by the Bank both during the lock-down and in the more difficult phase of recovery of production activities.
In terms of Npls, just as envisaged in the business plan, from January to July, we took over 1,3 billion Euro in nonperforming exposures and are currently taking part in 15 transfer processes for an equivalent nominal amount of approximately 1,9 billion Euro. The purchases finalised in the last months will make a good contribution towards the Bank’s profitability over the next two years, thanks to proactive, diversified collection activities”.
“The scenario we face remains uncertain. However, if we assume a progressive stabilisation of the macroeconomic context and no further lock-down periods, for FY 2020 we hope to achieve net profits ranging between 50 and 65 million Euro. In actual fact, for the second half, also in light of July’s collections of 25 million Euro as compared with the average of 17 million per month in the second quarter, we expect to see a progressive improvement in the Npl Segment, which should go back to operating fully in the last quarter of the year. The quality of credit in the Commercial & Corporate Banking Segment will depend on the speed of the economic recovery and may be impacted by the end of moratoriums. I do, however, remain very positive about the quality of our assets: our trade receivables, totalling 5,2 billion Euro, include approximately 800 million Euro in loans to the public administration. The remainder of the portfolio is well diversified, in terms of size, Segment and enterprises”, Luciano Colombini concludes.