Bff Bank Spa · MIL:BFF
Bff Bank Spa — BFF Banking Group — Q1 2021 Earnings Presentation
37 slides from Bff Bank Spa's earnings presentation, May 10, 2021
Slide 1: 1Q 2021 Results
1Q 2021 Results Earnings call 10th May 2021 bff.com
Slide 2: Disclaimer
Disclaimer This presentation may contain written and oral Presentation are provided as at the date of any offer or solicitation to purchase or "forward-looking statements", which includes hereof and are subject to change without subscribe for securities in the United States or all statements that do
Slide 3: Executive Summary
Executive Summary Closing of DEPObank (merger accounted from 1st March 2021) 1Q21 reported net income at €184.3m positively impacted by €161.5m badwill pre “Purchase Price Allocation”* 1Q21 adjusted net income + 8% yoy thanks to the good performance of transaction services businesses, lower co
Slide 4: 1Q21: good starting point of integration despite high liquidity
1Q21: good starting point of integration despite high liquidity Plus Minus Finalized DEPObank closing (accounting effect from 1st High public sector liquidity accelerated payments of March 21) and good visibility on synergies newest invoices: lower customer loans’ portfolio and lower new busines
Slide 5: How we represented 1Q21 P&L
How we represented 1Q21 P&L P&L Reported(1) P&L Adjusted 1Q21 BFF 1Q21 BFF January February March January February March 1Q21 DEPObank Badwill 1Q21 DEPObank January + February(2) Interim Net Profit or Loss: price March January February March adjustment Transaction costs Securities Services + Securit
Slide 6: Stronger capital and increased buffer through DEPObank acquisition
Stronger capital and increased buffer through DEPObank acquisition 1 Cash Consideration component at closing equal to €217.7m (excluding ICT Earn Out) DEPObank CET1, post Cash Consideration and releases and deductions related to DTA and mark-to-market, is equal to c. €142m (covered by the capita
Slide 7: +8% yoy Adjusted Net Income
+8% yoy Adjusted Net Income Reported Net Income impacted by badwill and transaction costs Reported net income raises to €184.3m because of the “gross” Badwill -that could change post Purchase Price Allocation completion (within 12 months from closing) 1Q21 adjusted net income + 8% yoy (3m BFF +
Slide 8: The Group is organised around the 3 businesses, supported by the Corporate Center
The Group is organised around the 3 businesses, supported by the Corporate Center Management Corporate Center Staff Control Functions • Group General Counsel & • Chief of Staff HC 280 Business Legal Affairs • HR & Organizational • Communication & Institutional Relations • Risk Management • Complianc
Slide 9: The 3 business units driving post merger performance
The 3 business units driving post merger performance CLIENTS WHAT WE OFFER WHERE 1 • Public sector suppliers 1) Non-recourse factoring FACTORING & • Large multinationals 2) Lending (Central-Eastern Europe only) LENDING • Hospitals & municipalities 3) Credit management 2 • Domestic asset managers and
Slide 10: Business Units & Corporate Center P&L
Business Units & Corporate Center P&L Adj. BFF Factoring & Securities Corporate BFF Banking Payments Banking Lending Services Center incl. Adjustments(2) Group P&L Group P&L P&L synergies P&L reported P&L 1Q 2021 Revenues €36.2 €14.0 €13.4 €12.5 €76.0 €143.1 €219.1 OPEX incl. D&A (€8.7) (€7.3) (€7.7
Slide 11: Factoring and Lending – KPIs
Factoring and Lending – KPIs “Down” loans and volume in Italy and Spain, “up” LPI collection & fund Strong impact of high liquidity in the system: €m 1Q19 1Q20 1Q21 Volume 967 1,172 1,107 o Loans’ portfolio and volume decreased yoy due to higher collections driven by Italy and Spain Collections -
Slide 12: Factoring and Lending: faster payments impacted loans portfolio and new volume
Factoring and Lending: faster payments impacted loans portfolio and new volume in Italy and Spain Geographic diversification partially offsetting negative Customer Loans – €m 1Q19 1Q20 1Q21 Italy 2,288 2,346 1,934 performance of the domestic and Spanish markets. International Spain 207 387 281 bus
Slide 13: Factoring and Lending – P&L: impacted by smaller loan portfolio
Factoring and Lending – P&L: impacted by smaller loan portfolio €m 1Q19 1Q20 1Q21 Net interest income impacted by lower loans Interest Income 54.2 55.1 45.4 portfolio driven by faster collections at YE20 of which Net LPI over-recovery (1.0) (3.6) (1.2) High liquidity positively impacted collecti
Slide 14: Securities Services KPIs: raising Assets Under Management and ample liquidity
Securities Services KPIs: raising Assets Under Management and ample liquidity Depositary Bank’s AuD at €77.7bn (+19% yoy), vs. 1Q19 1Q20 1Q21 €76.0bn at YE20, thanks to positive: Depositary Bank (AuD, €m) 65,753 65,496 77,729 (i) market performance compared to 1Q20, critically Fund Accounting (AuM
Slide 15: Securities Services – P&L: positive performance driven by higher AuM
Securities Services – P&L : positive performance driven by higher AuM & good cost control €m 1Q19 1Q20 1Q21 Net Interest Income at €3.0m in 1Q21 (vs. €2.7m in 1Q20) Net Interest Income 3.2 2.7 3.0 positively impacted by higher deposits Net Fee and Commission Income 10.4 10.3 10.9 Net Fee and Com
Slide 16: Payments KPIs: digital transactions almost back to normal after Covid-19
Payments KPIs: digital transactions almost back to normal after Covid-19 crisis Transactions of transfer and collections +7% yoy at 1Q19 1Q20 1Q21 #74m, thanks to positive performance of SEPA bank Transfer and collections (n° oper. #k) 68,085 68,489 73,518 transfers Card & Other settlement (n° ope
Slide 17: Payments financials: positive performance overcoming Covid-19 downturn
Payments financials: positive performance overcoming Covid-19 downturn Stable yoy Net Interest Income at €0.5m €m 1Q19 1Q20 1Q21 Net Fee and Commission Income increased by €0.9m Net Interest Income 0.4 0.5 0.5 (+9% yoy) as a result of the increasing revenues coming Net Fee and Commission Income
Slide 18: Corporate center – synergies to be deployed
Corporate center – synergies to be deployed Net interest income reduced by fair value of ex-DEPO bond €m 1Q19 1Q20 Net InterestIncome 7.8 8.4 portfolio post closing Other Income 0.0 0.1 7.7 8.1 Other operating income benefits from HTC&S revenues Net Banking Income Other Operating Income (Expense
Slide 19: Synergies on track
Synergies on track Funding Funding: already reduced wholesale funding lines synergies ~30-40 and on-line deposits, in euro and PLN, in order to deploy all expected synergies starting from 2Q 2021 OPEX: (i) already delivered initiatives able to Opex ~20 synergies generate €14m of synergies in 202
Slide 20: Combined balance sheet lower than sum of the part
Combined balance sheet lower than sum of the part Deployment of DEPO liquidity in F&L business gradually started in March 21, and will accelerate in 2Q21 BS as of 31/3/21 smaller of c. €3.2bl vs “31/12/20 sum of the part”, despite higher deposits from depositary bank as of 31/3/21 Reduction in E
Slide 21: Stronger Balance Sheet in 1Q21
Stronger Balance Sheet in 1Q21 Leverage LCR 374.3% Ratio 3.8% NSFR 192.3% Factoring Customer loans funded through a well diversified Fully Breakdown of 1Q21 Balance Sheet (€m) 255.7% funding base phased-in 13,507 13,507 Strong LCR at 374.3% and NSFR at 192.3%, which will be 424 Others 692 Others
Slide 22: Moody's upgraded LT Bank Deposit Rating to Baa2
Moody’s upgraded LT Bank Deposit Rating to Baa2 After the acquisition and merger of Ranking by Moody's Supervisory Total assets Moody's Long- Moody's Moody's Senior Long-term Bank Issuer / Entity 31/12/2020 term Bank Unsecured / DEPObank, on 21st April 2021 Deposit Rating Authority (€bn) Deposit R
Slide 23: Asset quality like no other: best in class
Asset quality like no other: best in class Net Non-Performing Loans Evolution (€m) •A Zero bps Cost of Risk in 1Q21 due to portfolio reduction NPL Ratio excl. Italian Municipalities 0.1% 0.1% 0.2% D •B Impaired loans are essentially towards public Coverage Ratio excl. Italian Municipalities 78% 84%
Slide 24: Strong capital position, with c. €193m of accrued dividends and additional €151m of excess capital
Strong capital position, with c. €193m of accrued dividends and additional €151m of excess capital Total Capital ratio at 21.7% and CET1 ratio at 17.3%(1), with RWAs 2,370 Exclude 1,616 2,253 DEPObank €151m of capital in excess of 15% TC ratio target, €165m of RWAs density(3) 59% 39% 41% 2019-20 a
Slide 25: One of the few Italian "true" public companies
One of the few Italian “true” public companies True public company with best corporate governance Shareholdings post DEPObank merger One of the few Italian public companies, striving for best corporate governance standards Aim to be a reference model for public companies’ governance in Italy, al
Slide 26: Key takeaways
Key takeaways Finalized closing with DEPObank (1st March 21 for accounting purposes), with clear visibility on synergies Factoring & Lending: negative performance of customer loans’ portfolio in Italy & Spain, positive impact of diversification, collection accelerated by high liquidity in the sy
Slide 27: Appendix
Appendix bff.com
Slide 28: A transfer pricing framework has been set up to avoid excess liquidity and pricing erosion
A transfer pricing framework has been set up to avoid excess liquidity and pricing erosion 2021 illustrative example •1 Corporate Center manages the funding to and from BUs •A CC provides funding to BU factoring, lending and credit management and receives a remuneration equal to the COF pre Depo •2
Slide 29: New Business Volume (BU Factoring & Lending)
New Business Volume (BU Factoring & Lending) €m – 1Q21 NHS P.A. Other Total YoY % change Italy 457 156 18 632 -7% Spain 198 107 - 305 +3% Portugal 29 8 - 37 +110% Greece 21 2 - 22 +32% Croatia 0 - - 0 n.s. France 4 0 - 4 +337% Total 709 273 18 1,000 -1% Local €m – 1Q21 Healthcare Other Total YoY % c
Slide 30: Traditional business subject to seasonality, with peak in 4Q
Traditional business subject to seasonality, with peak in 4Q Loans Evolution by Quarter (€m) 1Q 2Q 3Q 4Q 4,118 4,067 3,7383,7893,683 3,583 3,4613,4543,563 3,330 3,018 2,8783,0003,026 2,499 2,5322,5572,596 2,2702,3192,212 1,962 1,554 1,603 1,3431,349 1,3561,457 1,145 2014 2015 2016 2017 2018 2019 202
Slide 31: Securities Services & Payments
Securities Services & Payments AuD Depositary Bank by Quarter (€m) Deposits by Quarter (€m) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 12 10 9 8 8 7 7 7 6 71 70 72 76 78 66 67 69 65 2019 2020 2021 2019 2020 2021 AuC (€m) Payment Transactions by Quarter (nr oper. #m) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 162 155 158 160 148 149 143
Slide 32: Summary Profit & Loss 1Q21
Summary Profit & Loss 1Q21 1Q21 1Q21 1Q21 1Q21 1Q21 1Q21 1Q21 FACTORING TOT D2S PAY CC TOT ADJ adj & LENDING REPORTED €/m Net Interest Income 32.9 3.0 0.5 5.4 41.7 -3.3 38.5 Net Fee and Commission Income 1.7 10.9 10.3 -0.5 22.4 -13.5 8.9 Dividends 0.0 0.0 0.0 3.6 3.6 0.0 3.6 Gains/Losses on Trading
Slide 33: Summary Profit & Loss 1Q20
Summary Profit & Loss 1Q20 1Q20 1Q20 1Q20 1Q20 1Q20 1Q20 1Q20 FACTORING TOT €m D2S PAY CC TOT ADJ adj & LENDING REPORTED Net Interest Income 34.9 2.7 0.5 13.5 51.6 -8.3 43.3 Net Fee and Commission Income 1.5 10.3 9.4 -0.6 20.6 -19.5 1.2 Dividends 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Gains/Losses on Trading 0
Slide 34: Summary Profit & Loss 1Q19
Summary Profit & Loss 1Q19 1Q19 1Q19 1Q19 1Q19 1Q19 1Q19 1Q19 FACTORING TOT €m D2S PAY CC TOT ADJ adj & LENDING REPORTED Net Interest Income 36.6 3.2 0.4 10.4 50.7 -6.3 44.4 Net Fee and Commission Income 1.4 10.4 9.4 -0.4 20.9 -19.6 1.3 Dividends 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Gains/Losses on Trading 0
Slide 35: Summary Balance Sheet
Summary Balance Sheet BFF combined BFF stand alone from 1/3/21 1Q19 1Q20 FY20 1Q21 €m Reported Reported Reported Reported Cash and cash Balances 39.3 65.6 173.3 3,262.7 Financial assets measured at fair value through profit or loss 0.0 0.0 0.0 39.7 a) financial assets held for trading 0.0 0.0 0.0 5.
Slide 36: Breakdown by quarter – BFF Banking Group
Breakdown by quarter – BFF Banking Group Adjusted values - €m 1Q19 1Q20 1Q21 Net Interest Income 50.7 51.6 41.7 Net Fee and Commission Income 20.9 20.6 22.4 Other Income 4.0 2.6 6.7 Net Banking Income 75.6 74.8 70.8 Other Operating Income (Expenses) 3.4 3.3 5.3 Total Net revenues 79.0 78.2 76.0 Oper
Slide 37: Asset quality
Asset quality 31/03/2021 €/000 Gross Provision Net Total non performing 91,088 (16,834) 74,254 Total unlikely to pay 15,402 (3,727) 11,675 Total past due 5,960 (195) 5,765 Total 112,451 (20,757) 91,694 31/12/2020 €/000 Gross Provision Net Total non performing 81,582 (14,761) 66,821 Total unlikely to