FINANCIAL TARGETS FOR 2022
- – Increase in sustainable profit to 147 million Euro to further improve financial solidity and support growth, whilst also ensuring payment of a significant dividend to shareholders;
- – ROTE to climb to 8.9%, indicating that the Group is well positioned in the most profitable segments of the market;
- – CET 1 ratio of 12% in 2022, exceeding the current SREP threshold¹ of 8.12%;
- – Investments of approximately 60 million Euro in support of organic growth and business stability;
- – Stable operating costs due to monitoring and efficiency gains, despite significant investments;
- – Pay-out ratio for Banca IFIS shares of 40%-45%, corresponding to a yield of over 7% at current market prices.
Profitability of all business units, with greater competitive advantage in the NPL and Factoring units; revenue growth is expected to amount to 602 million Euro, driven by:
- – purchases of non-performing loans of 8.5 billion Euro (nominal amount) in the three-year period for the NPL segment;
- – increase in the volumes of loans to customers during the three-year period of 1 billion Euro in the Commercial and Corporate Banking segment, driven by digital innovation, the new market coverage model and the new communications and marketing strategy.
Milan, 14 January 2020 – The Board of Directors of Banca IFIS met under the chairmanship of Ernesto Fürstenberg Fassio and approved the 2020/2022 Strategic Plan.
“The new Plan confirms Banca IFIS’s role as a specialist bank in support of the real economy with the primary goal of generating increasing, sustainable profit by replacing the financial component deriving from the PPA with recurring business profit, whilst also distributing value to its shareholders,” explained Luciano Colombini, Banca IFIS’s Chief Executive Officer.
“Today we are presenting a business plan in line with the Bank’s core businesses. A plan that represents maximum transparency in the face of the market and which will lead Banca IFIS to further increase its commitment in the coming years to exploit all opportunities offered by the market in accordance with its stated objectives. The plan will be implemented by a management team of professionals with extraordinary track records, offering proven experience and complementary specialisation. We are a unique group in the banking industry due to our competitive positioning in the various markets and our distinctive business model, which we will continue to refine in order to strengthen our leadership.
The analyses of our strategic positioning and cost and capital allocation that we have conducted have shown that all our business areas remain profitable: in particular, NPLs and Factoring show the greatest competitive advantage. Diversification thus currently ensures the bank’s stability and reduces its enterprise risk. Our advantage is that we operate in segments of the market with ample room for growth and we have better management skills than our competitors, in addition to exclusive know-how.
Within the Commercial and Corporate Banking business, we will further increase our presence in the SMEs segment, which has always been integral to this Bank’s identity. We will do so by developing our model for serving this market through new investments in digital innovation and a marketing and communication strategy aimed at increasing the recognisability of Banca IFIS’s brand. A broader product range, along with a constantly evolving distribution and operations model, will allow us to expand our customer base, including in currently less served but high-potential areas.
The plan also calls for considerable improvement in asset quality, with a reduction in the loss rate to 75 basis points in 2022, through careful management of the concentration risk and reinforcement of the loan disbursement, management and monitoring process, in addition to recovery of non-performing positions.
In the NPL segment, we will continue to operate as primary investors, leveraging on the strength of our servicer, one of Italy’s top servicers: from 2020 to 2022, we estimate that we will purchase 8.5 billion Euro of new non-performing loans. Our medium-term strategy will be based on purchasing portfolios of unsecured loans by participating actively in all sale processes on the market, expanding the characteristics of the non-performing portfolios purchased to include the secured and corporate segment and constantly increasing the efficiency of the recovery process for non-performing loans.
We do not expect calendar provisioning to have substantial effects over the three-year period. Afterwards, from 2023 onwards, when the portfolios purchased subject to calendar provisioning have reached a more significant scale, the strategy will be to serve as co-investor for NPLs, while continuing to act as a primary player for the asset classes of reference.
Within the plan, a great deal of attention has been devoted to regulatory capital performance, with the CET1 ratio rising to 12% by 2022, exceeding the current SREP threshold of 8.12%, due to the increase in profits,” concluded Luciano Colombini, Banca IFIS’s Chief Executive Officer.
