Reclassified consolidated data[1] – 1 January 2024/30 September 2024
- The Banca Ifis Group’s consolidated net profit amounts to 126,6 million Euro, up 1,5% from 124,7 million Euro in the same period of 2023. The results for the first nine months of 2024 were positively influenced by the performance of the commercial business and Npl Segment as well as the proprietary finance business.
- Net banking income, up 3,8% to 531,8 million Euro compared to 512,4 million Euro in the same period of 2023, benefits from the growth of the Commercial & Corporate Banking Segment (+3,9%, or 10,2 million Euro, compared to the first nine months of 2023), the positive contribution of the Npl Segment (+6,7%, or 13,5 million Euro, compared to the first nine months of 2023), as well as the increase in results from the financial instruments of the proprietary finance business unit (+63%, or 17,4 million Euro, compared to the first nine months of 2023). These values more than offset the increase in the cost of funding.
- The credit cost is 28,9 million Euro from 30,9 million Euro in the first nine months of 2023, confirming the prudent credit risk management in recent quarters.
- Operating costs of 299,7 million Euro (+5,9% compared to 283,1 million Euro in the same period of 2023) increase due to higher personnel expenses (127,2 million Euro compared to 120,5 million Euro in the same period of 2023), mainly due to the growth in the number of employees and the renewed NCBA, in addition to higher other administrative expenses (177,6 million Euro compared to 167,0 million Euro in the same period of 2023). These increases also reflect the integration of Revalea.
- Liquidity position, at 30 September 2024, is equal to approximately 2,1 billion Euro in reserves and free assets that can be financed by the ECB (LCR of approximately 900%).
Capital requirements[2]
- CET1 comes to 16,43% (14,87% at 31 December 2023) and TCR to 18,65% (17,44% at 31 December 2023), calculated including the profit generated during the first nine months of 2024, net of the dividend accrued.
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Rome, 7 November 2024 – The Board of Directors of Banca Ifis met today under the Chairmanship of Ernesto Fürstenberg Fassio and approved the consolidated results for the first nine months of 2024.
“Another solid quarter allows us to approach the end of 2024 with confidence and confirm the profit guidance for the current financial year at 160 million Euro. In this way, we confirm the financial targets of the 2022-2024 Business Plan, continuing to strengthen business development, accelerate the innovation and digitisation process and prudently manage credit risk. Despite a year characterised by geopolitical and macroeconomic uncertainties, the Bank continued to further strengthen its already wide range of products and services to accompany Italian small and medium-sized enterprises in their market challenges. We have also continued to implement our social banking model with processes aimed at financial re-inclusion, working towards a more sustainable recovery for our customers that is consistent with the path conceived by our Chairman Ernesto Fürstenberg Fassio. Revenue growth of 3,8% compared to the same period in 2023 reflected proactive sales dynamics, stable recoveries from the Npl business and increased results from the proprietary finance business instruments, which offset the increase in the cost of funding. At the same time, the work to streamline the duration of the securities portfolio allowed us to reduce the possible impact of future rate cuts on net interest income. In the coming quarters, the macroeconomic scenario should still be positive for the banking sector, albeit characterised by falling rates, a potential increase in competition in lending to higher-rated customers and a potential deterioration in asset quality due to the expected slowdown in the European economy. In this context, since the beginning of the year, the Bank has initiated a series of actions aimed at reducing the impact of a possible reduction in interest rates, while the possible risks on asset quality are mitigated by the diversification of the portfolio in terms of sectors and customers, the short duration of loans to customers, solid guarantees supporting exposures and the presence of management overlays. In the coming months, the Bank will complete the last projects of the three-year Business Plan, with a focus on digital and ESG business transformation processes”, says Frederik Geertman, CEO of Banca Ifis.
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The revenues of the Commercial & Corporate Banking Segment, which in the first nine months of 2024 grew by 3,9% compared with the same period of 2023, reflect the dynamism and quality of work of the commercial network which has allowed business to grow despite lower demand for credit due to higher interest rates and has allowed the Group to offset the increased cost of funding. During the first nine months of the year, the Bank developed new synergies with leading international partners, such as Yamaha Motors in the leasing and rental of electric bicycles for the tourism sector.
In the Npl Segment, cash recoveries on purchased portfolios in the first nine months of the year, including 41 million Euro from Revalea, amounted to 316 million Euro, up 7,3% compared to the same period in 2023. To date, judicial and extra-judicial recovery activities do not show any significant negative impact from rising inflation and interest rates.
The average cost of funding in Q3 2024 remained stable at 3,94%, remaining at the same level as in the previous quarter. The Bank therefore confirms its goal of keeping the average cost of funding in 2024 below 4,0%. In September, Banca Ifis also completed the repayment of the TLTRO.
The proprietary finance securities portfolio decreased from 3 billion Euro in December 2023 to 2,6 billion Euro in September 2024, while its duration was extended from 2,3 years in December 2023 to 3,3 years in September 2024, confirming an active and opportunistic management while maintaining a limited risk profile.
The asset quality ratios, the Gross Npe Ratio and the Net Npe Ratio, stand at 5,7% and 3,2% respectively (respectively 5,4% and 3,0% at 30 June 2024), up slightly from the previous quarter due to the reduction in performing loans attributable to the seasonality of the factoring business, while gross and net impaired loans remained substantially stable in terms of amount compared to 30 June 2024. The asset quality ratio at 30 September would come in respectively at 5,1% and 2,7% 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 average coverage of non-performing loans was continuously strengthened from 35% in 2022 to 46% at 30 September 2024.
Capital ratios confirm the Group’s great solidity. Both the main indicators remain well above the minimum required levels, with a consolidated CET1 Ratio of 16,43% (14,87% as at 31 December 2023) and a consolidated Total Capital Ratio of 18,65% (17,44% as at 31 December 2023), calculated including profits of the first nine months of 2024, net of the dividend accrued.
The solid capital position allows for the distribution of 63 million Euro (1,2 Euro per outstanding share, gross of any withholding taxes) of a 2024 interim dividend, which will be paid with ex-dividend date 18 November 2024, record date of 19 November 2024 and payment date of 20 November 2024.
Please note that the Board of Directors’ report and the financial statements as at 30 September 2024 pursuant to Article 2433-bis of the Italian Civil Code. – on the basis of which the Board of Directors of Banca Ifis resolved to distribute the interim dividend and included in the Interim Report at 30 September 2024 – are made available to the public at the Bank’s registered office, as well as on the authorised storage mechanism and on the Bank’s institutional website, www.bancaifis.it, in the “Investor Relations” section. Lastly, for the purposes of the distribution of the interim dividend, the independent auditing firm PricewaterhouseCoopers S.p.A. today issued the opinion required by Article 2433-bis of the Italian Civil Code, which has been made available to shareholders at the Bank’s registered office.
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In view of the new Industrial Plan, the Board also approved the terms of the collaboration with Mr. Frederik Geertman for the renewal of the role of CEO for the next three years, which will be proposed to the General Shareholders’ Meeting of Banca Ifis in April 2025, based on the list submitted by the controlling shareholder La Scogliera SA, following the definition by the same company of the renewal proposal with Mr. Geertman. The resolution was made in compliance with the current legislation regarding transactions with related parties of lesser importance.
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Banca Ifis and its commitment to sustainability
During the period, Banca Ifis continued to pursue initiatives in the field of sustainability through an integrated and concrete approach aimed at creating positive social impact for businesses, territories and people. The Bank’s commitment continued along three main lines: governance, environment and social.
On the first front, the initiatives introduced over the past three years have been positively assessed by the international rating agency MSCI, which, in April 2024, raised Banca Ifis’s rating from A to AA, to the highest level in the Italian financial sector. The sustainable innovation of Banca Ifis’s business model continued with the integration of new partnerships with leading international operators in the field of green products such as e-bike leasing, photovoltaics and electric car charging stations.
On the social front, the Bank continued the community support initiatives of Kaleidos, the Social Impact Lab inspired by the Chairman Ernesto Fürstenberg Fassio. The project, which is linked to a 7 million Euro investment plan over the three-year period 2022-2024, has enabled as many as thirtyfive projects to be implemented throughout the country.
Lastly, on the social initiatives front, April 2024 saw the launch of ‘Ifis art’, the project desired and devised by Chairman Ernesto Fürstenberg Fassio that brings together all the projects carried out by the Bank to promote art, culture, contemporary creativity and their values. In June, the Bank enriched the collection of the Villa Fürstenberg International Sculpture Park – open to the public free of charge every Sunday – with nine works from the solo exhibition ‘Horse Power’ by Italian artist Nico Vascellari.
In September, Banca Ifis purchased a stake in the share capital of The Street S.r.l., the company in charge of managing the cultural hub of the Treviso Arts District. In particular, the Bank acquired a 25% stake in the share capital of the company, which today controls the majority of 21Gallery, Il Cantiere, Ristorante Vite and the design brand Ondesign. The operation is part of Banca Ifis’s strategy to support cultural and social impact activities in the territory, with reference to the North-East area of Italy where the Bank has its headquarters and roots.
The Banca Ifis social impact measurement model
To assess the impact of its initiatives, Banca Ifis has developed a social impact measurement model aimed at quantifying, through objective criteria, the social value generated on people and communities. Developed in collaboration with Triadi – a spin-off of the Polytechnic University of Milan – the model is replicable and scalable and allows for the effective targeting of social investments and the maximisation of the social value produced for the community, thus transforming the S (Social) of the ESG acronym into a tangible and measurable dimension.
These initiatives covered 10 different SDGs of the UN 2030 Agenda and allowed for the analysis of 9 macro social impact goals: youth empowerment, social inclusion, labour inclusion, gender equality, improving health and access to healthcare, defeating malnutrition, accessibility to healthy and proper nutrition, and urban regeneration.
Applying this model to projects that ended after their development, the average social impact multiplier is now 5,6: that is, for every euro invested by Banca Ifis in social initiatives, 5,6 Euro of positive social impact were generated.
After an initial experimental phase launched in 2023 on a select number of projects, in 2024, the Bank extended the measurement of social impact to a further 15 initiatives developed within Kaleidos, thus consolidating the figure of 9,4 million Euro of positive generated value for all projects examined.
[1] 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 apply starting 31 March 2024. As at 31 December 2023, the SREP requirements were: CET1 8,65%, a Tier 1 Ratio of 10,50% and Total Capital Ratio 12,9% (including 0,75% P2G).
[2] 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 Circular 262 (e.g. “Other administrative expenses”, “Other operating income/costs”) and included in a specific item “Non-recurring expenses and income”;
- the ordinary and extraordinary charges introduced against the Group’s banks (Banca Ifis and Banca Credifarma) under the Single and National Resolution Mechanisms (SRF and NRF) and the Deposit Protection Mechanism (DGS or FITD) are shown under a separate item called “Charges related to the banking system” (which is excluded from the calculation of “Operating costs”), instead of being shown under “Other administrative expenses” or “Net allocations to provisions for risks and charges”;
- the following is included under the single item “Net credit risk losses/reversals”:
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- 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.
[3] CET1, Tier 1 and Total Capital at 30 September 2024 include the profits generated by the Banking Group in the first nine months of 2024, net of the interim dividend. The generated profits allocated to Own Funds also take into account the foreseeable dividend pursuant to Article 2 of EU Regulation no. 241/2014.
