Release Date: August 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Banca Ifis (FRA:0I6, Financial) reported a net income of EUR 46 million for Q2 2024, marking a 3% increase year-on-year.
- The bank's CET1 ratio grew to 15.3%, indicating a strong capital position.
- Asset quality remains robust with no significant signs of deterioration, maintaining a positive risk-return performance.
- The bank successfully reduced its sensitivity to interest rate changes, enhancing financial resilience.
- Banca Ifis (FRA:0I6) has a solid liquidity position with EUR 1.7 billion in variable cash and counterbalancing capacity.
Negative Points
- Q3 is traditionally a slower quarter for Banca Ifis (FRA:0I6), which may impact commercial activity and financial performance.
- The bank faces continued pressure from inflation, impacting operating costs, particularly in IT and marketing expenses.
- Loan demand remains soft, requiring significant commercial effort to maintain stock levels.
- The bank's cost of funding has increased, although it has been offset by revenue growth.
- There is uncertainty regarding the macroeconomic environment, which could affect future asset quality and financial performance.
Q & A Highlights
Q: You reported a net income of EUR94 million in the first half. Shall we expect it to be to the net income guidance of EUR160 million for the full year? What are your expectations for 2025? And what kind of M&A opportunities are you considering?
A: Yes, EUR94 million is a constructive number considering our full-year guidance of EUR160 million. We had priced in three rate cuts and some asset quality deterioration, which hasn't materialized. We will review the guidance after Q3. For 2025, we are confident in growing our core business and will work on a new business plan this fall. Regarding M&A, we are open to opportunities that align with our strategy, particularly in commercial banking.
Q: You reduced your sensitivity to a 50 basis point rate move. Are you planning further actions to reduce this sensitivity?
A: Yes, we are taking additional actions to reduce our sensitivity further, aiming for a negative impact between EUR5 million and EUR8 million with a 50 basis point decrease in rates. Our guidance already includes three rate cuts.
Q: Can you provide a breakdown of your loan loss provisions in Q2 2024? Are you seeing signs of an economic slowdown?
A: The EUR7 million in provisions mainly comes from new flows to default. We don't see significant deterioration in asset quality or any sector-wide issues. Our provisions remain low, reflecting our cautious approach.
Q: Your risk-weighted assets remained flat while loans increased. Are you adopting any optimization actions?
A: We disposed of NPLs, reducing risk-weighted assets by around EUR70 million to EUR75 million. We expect to end the year with a CET1 ratio above 15.5%, considering the impact of government bond sterilization.
Q: What are your views on the NPL sector, given recent mergers and changes?
A: We focus on small-ticket, unsecured NPLs and servicing our own loans. We see continuous production of consumer credit NPLs and are not seeking scale in servicing. We are exploring structures to manage calendar provisioning limitations with co-investors.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
