Banca Ifis S.p.a. · MIL:IF
Banca Ifis — H1 2023 Earnings Presentation
44 slides from Banca Ifis's earnings presentation, Aug 3, 2023
Slide 1: 1H23 results
1983|2023 1H23 results 3 August 2023
Slide 2: Index
Index 1. 2Q23 results 2. Appendices 2.1 Segment results 2.2 Consolidated financial data 2.3 Company overview 2
Slide 3: 2Q23 results
P = «,>Bancalfis 1 2Q23 results
Slide 4: 2Q23 results summary
2Q23 results summary 1 Net income in 2Q23 of €45mln (substantially stable QoQ and +20% YoY). 1H23 net income at €91mln (+26% YoY) 2 Loan loss provisions at €6mln, of which €9mln provisions against macroeconomic risk and -€3mln (due to write backs) of ordinary cost of risk. Total prudential managemen
Slide 5: Net revenues accelerating
Net revenues accelerating Quarterly Revenues +8% • Net revenues at €173mln (substantially stable QoQ and +8% YoY) • 2Q23 net revenues breakdown: o Commercial banking revenues at €87mln (€88mln in 1Q23 161 176 173 and €68mln in 2Q22). 1Q23 included €8mln capital gains on direct and indirect PE invest
Slide 6: Very robust commercial activity continues
Very robust commercial activity continues Factoring turnover (€bn) New leasing business (€mln) +7%* +9% Market -2% Market +9% * excluding factoring vs PA 0.3 3.2 3.4 150 155 164 3.0 2Q22 1Q23 2Q23 2Q22 1Q23 2Q23 * Factoring turnover +7% YoY excluding factoring • Excellent commercial productivity in
Slide 7: Changing the Bank: digitalization projects in Commercial Banking
Changing the Bank: digitalization projects in Commercial Banking CLIENT ORIGINATION CLIENT ONBOARDING CLIENT MANAGEMENT & RISK & CREDIT AND PARTNERSHIPS AND PARTNERSHIPS COMMERCIAL DEVELOPMENT ASSESSMENT • Multi-channel lead • Selling processes • Ifis4business platform • Digital credit risk assessme
Slide 8: Npl portfolio performance resilient and well-positioned
Npl portfolio performance resilient and well-positioned* Track record in quarterly cash Revenues from judicial and collection (€mln) extrajudicial recovery** (€mln) • Negligible apparent impact from interest rate or inflation (in 2022, Banca Ifis booked 91 97 98 71 73 69 upfront reserves against inf
Slide 9: Changing the Bank: digitalization projects in NPL
Changing the Bank: digitalization projects in NPL RECOVERY DOCUMENT PAYMENTS PAYMENT RECONCILIATION STRATEGY CLASSIFICATIONS TO PA AND MONITORING ▪ Enhancement of portfolio ▪ Document classification ▪ Automation of payments to ▪ Expansion of the RPA performance monitoring through a new semantic the
Slide 10: Inflation impact countered by efficiency, solid cost control
Inflation impact countered by efficiency, translating into solid cost control Operating 98 91 105 costs* ▪ FITD&SRF €4mln in 2Q23 (€6mln provisions in 1Q23 – totally released in 2Q23 – with 2€mln P&L benefit) 4 5 ▪ Other operating costs*: impact of inflation and volume growth more than offset by con
Slide 11: Asset quality confirmed and overlay fully expresses Bank's prudence
Asset quality confirmed and overlay fully expresses Bank’s prudence Loan loss provisions* • Ordinary cost of risk: €5mln in 1Q23 and -€3mln due to write backs in 10 6 2Q23 5 • Increase in management overlay against performing loans 9 5 • 1Q23 +€5mln -3 • 2Q 23: +€9mln 1Q23 2Q23 • Total management ov
Slide 12: No signs of macro-risks materializing in commercial business
No signs of macro-risks materializing in Banca Ifis’s commercial business Example: payment days in factoring 89 89 90 89 88 88 88 84 83 82 77 76 75 75 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 Example: ratings migration in credit book* Example: probability of default* 2Q2
Slide 13: Capital ratios evolution
Capital ratios evolution Total 18.45% -0.41% 18.04% CET1 actual of 15.01% at 30 June 23, capital excluding 1H23 net income CET1 15.21% -0.20% 15.01% Key items of CET1 evolution in 2Q23 0.02% (0.07)% (0.15)% Phase in of Others • -0.15% mainly due to factoring IFRS 9 Own funds RWA seasonality (+€133ml
Slide 14: 2023 updated net income guidance
2023 updated net income guidance Banca Ifis 2023 net income - 2023 net income guidance increased to €160mln €mln Key assumption: • No geopolitical shocks, or significant deterioration in macroeconomic and financial markets conditions, or relevant regulatory changes Main drivers of the update + €91ml
Slide 15: New dividend policy of Banca Ifis
New dividend policy of Banca Ifis Illustrative: 2023 dividends New dividend policy Net income • Progressive payout ratio, upon exceeding the threshold of earnings Consequent necessary to satisfy the Bank’s capital requirements, taking into guidance potential dividends account (i) the evolution of th
Slide 16: Funding plan to reimburse TLTRO expiring in Sept 2024
Funding plan to reimburse TLTRO expiring in Sept 2024 Management actions to reimburse €2bn TLTRO due in Sept. 2024: comfortable liquidity allows for a possible partial early repayment ✓Ca. €400mln: re-marketing of senior leasing securitization notes to a primary Italian bank proving the sound asset
Slide 17: Quarterly results
Quarterly results Reclassified Consolidated Income Statement - 1Q23 2Q23 1H22 1H23 (€ mln) 1 Includes €8mln capital gains on PE investments Net interest income 139.4 135.2 264.4 274.7 Net commission income 23.3 27.0 42.2 50.3 due to the disposals of some equity stakes Trading and other revenues 1 13
Slide 18: Appendices
P = «,>Bancalfis y ) Appendices
Slide 19: 2.1 Segment results
Index Banca fis 2.1 Segment results 19
Slide 20: 2Q23 Results: P&L break-down by business unit
2Q23 Results: P&L break-down by business unit Commercial & Corporate banking Tot. 1 €9mln add-on provisions against Corp. Banking Commercial & Non core & macroeconomic risk Data in € mln Npl Factoring Leasing Consolidated & Lending Corporate G&S banking Net interest income 64 27 12 20 59 13 135 2 €4
Slide 21: Factoring
Factoring Turnover - €bn 1 3.0 3.5 3.2 3.5 3.1 3.5 1 2Q23 factoring turnover +7% YoY excluding factoring 0.3 vs. PA, for which Banca Ifis is reviewing its business 0.4 model, following the full application of the New DoD 2 The reduction of the factoring loans YoY (-7%) is due 3.2 3.2 3.5 3.4 the rev
Slide 22: Leasing
Leasing New business - €mln 1 1• New leasing +9% YoY, proving resilient commercial 127 150 149 221 155 164 activity 38 2• Net revenues / average customer loans at 4.1% in 29 2Q23 24 22 101 28 24 50 56 3• Asset quality risk is mitigated by strong sector and 53 54 42 borrower diversification and by th
Slide 23: Npl Business: portfolio evolution
Npl Business*: portfolio evolution Npl portfolio evolution Key numbers* • 2.1mln tickets, #1.5mln borrowers NBV** 1,483 1,465 €mln • Extensive portfolio diversification by location, type and age of borrower GBV €bn 22.8 0.1 (1.0) 22.0 Npls acquired in 2Q23: €0.1bn GBV • Acquisition of Revalea from M
Slide 24: Npl Business: ERC
Npl Business*: ERC ERC assumptions ERC: €2.8bn • ERC based on proprietary statistical models built using internal historical data series and homogeneous clusters of borrowers 1.4 2.8 o Type of borrower, location, age, amount due, employment status 1.4 2.5 o Time frame of recovery o Probability of de
Slide 25: Npl Business: GBV and cash recovery
Npl Business*: GBV and cash recovery Judicial recovery Non judicial recovery – Voluntary plans Judicial recovery (€ mln) GBV % GBV, data in €mln To be processed 483 485 483 471 471 476 475 Frozen 1,609 22% 461 434 Court injunctions [“precetto”] and foreclosures 1,073 15% 409 Order of assignments 837
Slide 26: Npl Business: cash recovery and P&L contribution
Npl Business*: cash recovery and P&L contribution Cash collection 1 Npl cash collection at €98mln. As planned in the 3Y Business Plan, the Bank is expecting a slight increase of settlements (“saldi e stralci”) to reduce timeframe of collections Data in € mln (excluding 2021 2022 1Q21 2Q21 3Q21 4Q21
Slide 27: Npl Business: GBV and NBV evolution
Npl Business*: GBV and NBV evolution GBV - €mln 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 Waiting for workout - Positions at cost 1,147 107 1 203 3,409 2 3,850 4,193 1,571 1,284 1,096 1,149 Extrajudicial positions 10,987 11,280 11,657 10,804 11,155 11,379 13,386 14,302 14,196 13,510 - Ongoin
Slide 28: Npl Business: P&L and cash evolution
Npl Business*: P&L and cash evolution P&L - €mln 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 Waiting for workout - Positions at cost Extrajudicial positions 22 29 30 38 29 25 23 22 27 26 - Ongoing attempt at recovery (2) 6 (2) 6 (1) 0 4 1 (1) 0 - Non-judicial payment plans 24 23 32 33 30 24 18
Slide 29: Npl Business: portfolio diversification
Npl Business*: portfolio diversification Breakdown of GBV by type Breakdown of GBV by borrower age Other Consumer 18-39 1% 34% 8% >60 40-49 39% 22% Banking 65% 50-59 31% Breakdown of GBV by ticket size Breakdown of GBV by region 5k North 10% 34.9% > 100k 23% from 5k to South & Island Center 20k 30%
Slide 30: Binding offer to acquire Revalea from Mediobanca
Binding offer to acquire Revalea from Mediobanca Revalea (€mln) 2022 • Binding offer to acquire from Mediobanca the entire equity of Revalea, subject to regulatory approval, for a consideration of €100mln. The €17mln badwill will be booked Customer loans 256 as PPA Other assets 28 • As at 31 Dec 22,
Slide 31: 2.2 Consolidated financial data
Index 2.2 Consolidated financial data 31
Slide 32: Customer loans
Customer loans Customer loans (€ mln) 10,187 9,834 10,114 • 2Q23 customer loans at €10,114mln (+3% QoQ) driven by: 2,152 2,255 2,101 o Normal seasonality in factoring (+4% QoQ) healthy YoY growth (excluding factoring vs. PA) 2,287 2,327 2,296 o Purchase of Government bonds in G&S (+€154mln QoQ) 1,47
Slide 33: Asset quality – 2Q23
Asset quality – 2Q23 Asset quality (€ mln) Consolidated ratios 4Q22 1Q23 2Q23 • Asset quality ratios in 2Q23 Gross Npe* 5.9% 6.1% 5.9% o Gross Npe Ratio*: 5.9% (6.1% in 1Q23); 4.5% excluding Net Npe* 4.0% 4.1% 3.9% loans in past due vs. Italian public health system Commercial & o Net Npe Ratio*: 3.9
Slide 34: Funding
Funding Funding (€mln) • Customer deposits +7% QoQ due to increase in 11,131 11,112 11,142 repurchase agreements 999 1,060 1,028 • Securitizations: €1,054mln of factoring and 2,424 2,035 2,051 €400mln of Banca Credifarma securitizations 1,477 1,455 • New bond issue of €300mln in Jan 2023 with 4Y 1,4
Slide 35: Proprietary portfolio: resiliency and positive contribution to P&L
Proprietary portfolio: resiliency and positive contribution to P&L • Long term «fundamental» positioning strongly focused on investment grade bond area/high dividend equity stocks coupled with opportunistic trading approach Expected 2023 further • Low duration level revenues upside: • Use of enhanci
Slide 36: Reclassified consolidated operating costs
Reclassified consolidated operating costs* Operating costs (€mln) 2Q23 operating costs 112 105 • HR costs increase due to collective contract renegotiation accruals 98 93 91 • +€13mln QoQ in other operating costs: o €4mln related to SRF payments in 2Q23 (€6mln provisions in 1Q23 – released in 2Q23 –
Slide 37: 2.3 Company overview
Index 2.3 Company overview 37
Slide 38: A challenger, but with 40 years of track record
A challenger, but with 40 years of track record Commercial and Corporate Banking NPL ► Specialised player for SMEs, with a broad range of credit ► Investor and servicer specialized in small ticket NPEs, products (factoring, lending, leasing, and rental) with a distinctive vertically integrated busin
Slide 39: 1H23 Results: P&L break-down by business unit
1H23 Results: P&L break-down by business unit Commercial & Corporate banking Corp. Banking Tot. Commercial & Data in € mln Npl Factoring Leasing Non core & G&S Consolidated & Lending Corporate banking Net revenues 137 86 31 58 175 37 349 % of total 39% 25% 9% 17% 50% 11% 100% Loan loss provisions 0
Slide 40: Consistent core net income growth, low risk profile
Consistent “core net income” growth, driven by our capabilities, with a low risk profile Net income target, €mln Actual Target Banca Ifis’ risk profile Business Plan targets Net 118** 137* 161 • Structurally protected liquidity income, €mln position (maturities) • Marginal contribution of 160* 161 e
Slide 41: Banca Ifis's superior risk-return trade-off (1/3)
Banca Ifis’s superior risk-return trade-off (1/3) Data in Turnover 4 times per year; double risk assessment; rapidly € bn adapting sector exposure Secured against the pharmacy, regulated sector, protected from competitors 2.6 Average LLP in the last 5Y of ca. 25 bps 80% state guaranteed >80% in rati
Slide 42: Banca Ifis's superior risk-return trade-off (2/3)
Banca Ifis’s superior risk-return trade-off (2/3) € bn Average Duration in Y Average ticket size Factoring 2.6 0.21* €350k* Leasing 1.3 2.7 €45k auto €60k equipment Rental 0.2 2.0 €6k Medium term lending 0.7 3.0 €300k Loans to pharmacies 0.8 7.5 €400k Structured finance 0.7 4.0 €12mln NPLs 1.5 4.0 €
Slide 43: Banca Ifis's superior risk-return trade-off (3/3)
Banca Ifis’s superior risk-return trade-off (3/3)* Customer deposit breakdown Very limited corporate deposits 5,091 5,461 Corporate 10% Retail 699 90% 564 566 Other deposits, mainly 356 136 146 retail ** Corporate deposits Rendimax deposits: 83% protected by FITD German retail deposits Above €100K 1
Slide 44: Disclaimer
Disclaimer • This Presentation may contain written and oral “forward-looking statements”, which includes all statements that do not relate solely to historical or current facts and which are therefore inherently uncertain. All forward-looking statements rely on a number of assumptions, expectations,