Banca Ifis S.p.a. · MIL:IF
Banca Ifis — Q1 2020 Earnings Presentation
38 slides from Banca Ifis's earnings presentation, May 12, 2020
Slide 1: 1Q 2020 Results
1Q 2020 RESULTS 12 MAY 2020
Slide 2: Table of contents
Table of contents 01 Summary results 02 1Q 20 results 03 Appendices 3.1 Segment results 3.2 Consolidated financial data 3.3 La Scogliera: implications of CRD IV 3.4 Focus on DTAs and PPA 2 BANCA IFIS
Slide 3: 1Q 20 key facts and Covid-19
1Q 20 key facts and Covid-19 • 1Q 20 Banca IFIS’s results were impacted by Covid-19 pandemic, although January and February results were in line with budget • In 1Q 20, we completed the disposal of a Milan real estate property with pre-tax capital gain (net of transaction cost) of €24mln, we issued
Slide 4: Covid-19 response
Covid-19 response Business continuity Employee security Client support • ~93% of employees around Italy • Enforcement of all security measures • Continue to responsibly lend to working remotely. Organizing Phase 2 envisaged by the law qualified customers: ca. 300# new customers in March and April de
Slide 5: Commercial & corporate banking
Commercial & corporate banking Potential impact of Covid-19 Banca IFIS business mitigation New management actions • Client, sector and product diversification on • Careful analysis of sector and company outstanding portfolio specific in new lending. Focus on existing • Commercial and well known clie
Slide 6: NPL business
NPL business Potential impact of Covid-19 Banca IFIS business mitigation New management actions • Portfolio diversification: ~ 1.3m borrowers • Confirmed interest in purchasing new NPL portfolios and actively participating in • Court shut down • ~40% of order of assignments towards disposal processe
Slide 7: Covid-19. Net banking income monthly evolution
Covid-19. Net banking income monthly evolution* 1Q 20, Banca IFIS’s results were impacted by Net banking income - Monthly evolution (mln) Covid-19 pandemic, although Jan. and Febr. results were in line with budget 43 44 19 • In NPL, the impact was mainly on the judicial recovery. New court injunctio
Slide 8: Covid-19: suspension of 2020-22 Industrial Plan guidances
Covid-19: suspension of 2020-22 Industrial Plan guidances • Currently, the economic impacts on the various Group companies of the COVID-19 pandemic are characterized by strong uncertainty. The Group's economic, equity and financial situation is solid and allows the Bank to face the ongoing crisis •
Slide 9: Table of contents
Table of contents 01 Summary results 02 1Q 20 results 03 Appendices 3.1 Segment results 3.2 Consolidated financial data 3.3 La Scogliera: implications of CRD IV 3.4 Focus on DTAs and PPA 9 BANCA IFIS
Slide 10: Summary results
Summary results 1Q 2020 Net income Net banking income Operating costs LLPs • €26mln net income • €106mln (€130mln in 1Q • €73mln (€74mln in 1Q 19, • Cost of risk of €19mln, 19, €167mln in 4Q19) €82mln in 4Q19) including €6mln on a single impacted by Covid-19 Interbanca position STOCK Customer loans
Slide 11: Quarterly results
Quarterly results (€ mln) 1Q 19 4Q 19 1Q 20 1Q 20 results Net interest income 115.3 134.2 91.4 1 Net commission income 23.8 25.3 21.1 1 Covid-19 impact, of which ca. €9mln* in NPLs due to Trading and other revenues (9.0) 7.5 (6.6) 2 court shut down and ca. €4mln* due to extrajudicial Net banking inc
Slide 12: Seasonality in NPL and PPA and effect of Covid-19
Seasonality in NPL and PPA and effect of Covid-19 Net interest income in NPLs* 40 35 30 March 20 was 25 impacted by court 20 shut down 15 10 5 - Reversal of PPA ex-IB (pre-tax)* Capital gains from NPL disposal 1Q 20 pre tax No gains at 31 reversal PPA at 1Q 20 €9mln 22 22 23 10 21 17 17 8 8 Variabil
Slide 13: Capital structure
Capital structure B IFIS 14.28% 14.59% CET1 0.16% QoQ: driven by RWA decrease scope* 0.32% 0.14% -0.12% -0.17% due to lower commercial activity (mainly in La factoring) Scogliera scope* 10.96% 11.12% SREP** CET1 of 11.12% and other capital ratios 8.12% calculated net of 2019 dividends suspended in a
Slide 14: Table of contents
Table of contents 01 Summary results 02 1Q 20 results 03 Appendices 3.1 Segment results 3.2 Consolidated financial data 3.3 La Scogliera: implications of CRD IV 3.4 Focus on DTAs and PPA 14 BANCA IFIS
Slide 15: 1Q 20 Results: P&L break-down by business unit
1Q 20 Results: P&L break-down by business unit* Commercial & Corporate banking • Corporate banking and lending: includes structured finance, commercial medium long term lending guaranteed by Corp. Banking & Non core & MCC and lending towards pharmacies Data in € mln NPL Factoring Leasing Consolidate
Slide 16: Commercial & corporate banking: Facing Covid-19
Commercial & corporate banking: Commercial & Facing Covid-19 Corporate banking 1 Identification of most • We will not avoid any specific sectors, we will just monitor some sectors more carefully impacted sector than other, we will just monitor some sectors more carefully than other 2 Careful assessm
Slide 17: Commercial & corporate banking: sector breakdown
Commercial & corporate banking: Commercial & sector breakdown* Corporate banking Factoring – Client breakdown Leasing– Client breakdown Macro sector - data in €mln Customer loans % Macro sector - data in €mln Customer loans % Manufacturing 1.350 45% Manufacturing 355 25% Of which healthcare manufact
Slide 18: Factoring
Commercial & Factoring* Corporate banking Turnover - €bn Highlights • Factoring turnover -8% YoY due to commercial activity slowdown driven by Covid-19 outbreak. Further impacts 3.4 expected in 2Q 20 due to lockdown 3.2 • Factoring included €0.4bn exposure towards NHS / Public Administration 1Q 19 1
Slide 19: Leasing
Commercial & Leasing* Corporate banking New business - €mln Highlights Total 165 104 • New leasing -37% YoY due to Covid-19 outbreak. Further impacts expected in 2Q 20 driven by activity 23 slowdown 64 23 • Net banking income / average customer loans at 23 3.3% (3.8% in 1Q 19) mainly due to the new
Slide 20: NPL Business: portfolio evolution
NPL Business*: portfolio evolution NPL NPL portfolio evolution Key numbers* • 1.8mln tickets, #1.3mln borrowers NBV ** 1,278 1,269 • Extensive portfolio diversification by location, type and age €mln of borrower GBV 17.8 0.05 0 17.8 €bn Limited NPLs acquired in 1Q • Confirmed interest in purchasing
Slide 21: NPL Business: ERC
NPL Business*: ERC NPL ERC:€2.5bn ERC assumptions • ERC based proprietary statistical models built using internal historical data series and homogeneous 1.1 clusters of borrowers o Type of borrower, location, age, amount due, 2.5 employment status o Time frame of recovery 1.4 o Probability of decay
Slide 22: NPL Business: GBV and cash recovery
NPL Business*: GBV and cash recovery NPL Judicial recovery Non judicial recovery – Voluntary plans Ongoing GBV, data in €mln Judicial recovery (€ mln) GBV % processing Freezed** 2,533 44% 380 403 413 371 Court injunctions [“precetto”] Towards ODA or 276 283 317 325 328 335 340 352 271 571 10% secure
Slide 23: NPL Business: cash recovery and P&L contribution
NPL Business*: cash recovery and P&L NPL contribution • Banca IFIS continued to cash in from collections on existing NPL portfolios • Extrajudicial recovery (P&L contribution): in 1Q 20, new voluntary plan activations were higher than expected and new voluntary plan deactivation were lower than expe
Slide 24: NPL Business: stock by recovery phase
NPL Business*: stock by recovery phase NPL Average Cash Cluster GBV 1Q20 €mln % total Description Accounting valuation time frame** proceeds Recently acquired, under analysis to Waiting for workout - select the best recovery strategy, to be Positions at cost 1,440 8% assigned either to extrajudicial
Slide 25: NPL Business: GBV and NBV evolution
NPL Business*: GBV and NBV evolution NPL GBV - €mln 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Waiting for workout - Positions at cost 2,298 2,014 1,840 3,472 2,864 1,598 1,783 1,794 1,440 Extrajudicial positions 8,050 8,145 9,667 8,956 9,745 9,862 9,574 10,378 10,619 - Ongoing attempt at
Slide 26: NPL Business: P&L and cash evolution
NPL Business*: P&L and cash evolution NPL P&L - €mln 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Waiting for workout - Positions at cost Extrajudicial positions 21 13 13 17 19 19 19 20 17 - Ongoing attempt at recovery 2 (3) (3) (4) (3) (2) (1) 4 (4) - Non-judicial payment plans 19 16 16 21
Slide 27: NPL Business: portfolio diversification
NPL Business*: portfolio diversification NPL Breakdown of GBV by type Breakdown of GBV by borrower age Other 2% 18-39 Banking 48% >60 13% 30% 40-49 50-59 28% Consumer 50% 29% Breakdown of Gross Bad Loans by ticket size Gross NPL breakdown by region 5k 11% NORTH 32.4% > 100k 25% from 5k to CENTER 23.
Slide 28: Table of contents
Table of contents 01 Summary results 02 1Q 20 results 03 Appendices 3.1 Segment results 3.2 Consolidated financial data 3.3 La Scogliera: implications of CRD IV 3.4 Focus on DTAs and PPA 28 BANCA IFIS
Slide 29: Customer loans
Customer loans Customer loans (€ mln) Highlights • In 1Q 20, there was a slowdown in commercial activity due to 7,322 7,651 7,601 Covid-19 outbreak. Covid-19 impacted all the business units (1) of the Bank: factoring, leasing, structured finance, corporate banking and lending 639 946 1,073 • NPL sta
Slide 30: Funding
Funding Funding (€ mln) Highlights 7,822 8,463 8,468 • 1Q 20 customer deposits came in at € 4,894mln (-392mln QoQ) reflecting lower funding requirements. The Bank 167 223 reduced its most expensive deposits expecting lower 792 791 150 credit demand. The average cost of funding of Rendimax 694 is equ
Slide 31: Asset quality – 1Q 20
Asset quality – 1Q 20 Asset quality (€ mln) Highlights Commercial • NPL Business not included in this analysis & Corporate Gross Coverage % Net Banking • NPE ratios in Commercial & Corporate Banking reported a Bad loans slight increase QoQ, due to the decrease in customer loans: 211 80% 43 UTPs o Gr
Slide 32: Consolidated operating costs
Consolidated operating costs Operating costs (€mln) Highlights • 1Q 20 operating costs ~ -€8.2mln vs. 4Q 19, mainly 81.7 driven by: 74.4 74.0 73.5 o ~ -2.2mln in cost of personnel 64.9 o ~ -€5.9mln in other adm. expenses and other income / expenses, of which ~ -€3mln lower recovery variable costs in
Slide 33: Table of contents
Table of contents 01 Summary results 02 1Q 20 results 03 Appendices 3.1 Segment results 3.2 Consolidated financial data 3.3 La Scogliera: implications of CRD IV 3.4 Focus on DTAs and PPA 33 BANCA IFIS
Slide 34: La Scogliera: implications of CRD IV
La Scogliera: implications of CRD IV La Scogliera S.p.A. • The application of the 2013/36/EU (CRD IV) Directive and EU Regulation 575/2013 Consolidating Group (CRR) envisages that 49.2% of the excess capital of the Banca IFIS Group Scope is not included in the CET1 of La Scogliera Group Scope. CET1
Slide 35: Table of contents
Table of contents 01 Summary results 02 1Q 20 results 03 Appendices 3.1 Segment results 3.2 Consolidated financial data 3.3 La Scogliera: implications of CRD IV 3.4 Focus on DTA and PPA 35 BANCA IFIS
Slide 36: Focus on DTAs
Focus on DTAs Data in €/mln • DTAs related to write downs of loans convertible into tax credits (under Law 214/2011) • Their recovery is certain regardless of the presence of future taxable income and is defined by fiscal law (range ca. 5%-12% per annum, with full release by 2026) Convertible 218.4
Slide 37: Focus on ex-Interbanca PPA
Focus on ex-Interbanca PPA* Description Net customer loans and PPA - €mln Performing: 61.8 • In 2016, following the acquisition of Interbanca, PDs: 0.4 Banca IFIS valued the performing and non 455 UTPs: 25.3 performing loans of Interbanca by applying a Bad loans: 35.8 329 market discount and a liqui
Slide 38: 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,