Bff Bank Spa · MIL:BFF
Bff Bank Spa — BFF Banking Group — Jefferies Healthcare Conference 2019
22 slides from Bff Bank Spa's conference presentation, Jun 4, 2019
Slide 1: A Bank Like No Other
A Bank Like No Other® Jefferies Healthcare Conference June 4th, 2019 00
Slide 2: BFF Banking Group: A Bank Like No Other
BFF Banking Group: A Bank Like No Other® ▪ The leading provider of credit management and receivables factoring for the Healthcare (“HC”) We are and Public Administration (“PA”) suppliers in the European Union (“EU”) ▪ Financial services to tackle the payment delays to We offer the Public Sector supp
Slide 3: 30+ years of Serving HC and PA Suppliers
30+ years of Serving HC and PA Suppliers 1985: Established by a 2013: Turning point, 2016: Acquisition of 2017: becomes BFF 2019: Acquisition of group of pharmaceutical becomes a bank Magellan Banking Group and IOS Finance, leading companies lists on the Italian PA factoring player in Expansion in C
Slide 4: Profitable and Growing in Every Season
Profitable and Growing in Every Season Adjusted Net Income 2007-2018 (€m)(1) Unparalleled Capital Returns: IT Lira 500m (€260k) invested in 1985 vs. > €620m cumulated dividends Sovereign Debt Low interest rate and plenty of liquidity for Changing Credit Bubble Financial Crisis Crisis Government and
Slide 5: The Largest Purchaser of Government Receivables in the EU
The Largest Purchaser of Government Receivables in the EU Leadership position with presence in 8 countries ▪ Focus in servicing multinational clients across markets #1 in EU ▪ #1 in Italy for factoring toward PA & Manage c. 1 every 40 public HC sector’s invoice by value (1 every 20 in Italy) − Marke
Slide 6: Supporting Suppliers to Tackle Endemic Payment Delays in the Public Sector
Supporting Suppliers to Tackle Endemic Payment Delays in the Public Sector… Source of PA payments delays Average payment time of the Public Sector in the EU(1) ▪1 Mismatch between centralised tax Italy 104 collection and decentralised public Portugal 86 spending Greece 73 Belgium 60 − In Italy, only
Slide 7: With Three Business Lines
…With Three Business Lines 1 2 3 Financing and Non- Credit Collection Non-recourse Factoring in Southern Europe Recourse Factoring in CEE Management (i.e. Servicing) % on total 76% 21% 3% revenues(1) 6% 0.4% 2% 8% 9% Volumes by 24% geography 70% 92% 89% Italy Spain (incl. IOS Finance) Portugal Greec
Slide 8: A Key Solution in the Complex Interaction Between PA and its Suppliers
A Key Solution in the Complex Interaction Between PA and its Suppliers… Public Sector Suppliers (BFF’s clients) Public Sector Debtors ▪ Long-standing relationship with top ▪ Long track record in dealing with PA/HC suppliers → top 10 clients have been BFF entities → better pricing clients for > 17 ye
Slide 9: Managed Efficiently thanks to an Advanced and Scalable IT Platform
…Managed Efficiently thanks to an Advanced and Scalable IT Platform A proprietary IT platform developed in-house… … Giving us best-in-class operating efficiency Cost/Income ratio ▪ Specialised platform incorporating know-how and experience developed over >30 years of 66% activity ▪ 49 proprietary sy
Slide 10: Proven Ability to Execute Organic Growth and M&A
Proven Ability to Execute Organic Growth and M&A… Customer Loans (€bn) Net Income (€m) 2.8 78 Strong 1.1 47 ▪ Grown factoring activity from HC only to entire PA in Italy organic ▪ Expanded greenfield from 2 to 5 countries across HC and PA growth 2013 2018 2013 2018 Countries 2 5 covered (#) ▪ 2016:
Slide 11: While Delivering Superior Financial Performance
… While Delivering Superior Financial Performance Improved Funding Invested in the Maintained a High Generated High Generated High and Cost by Accessing Business while Quality Portfolio, Returns and Free Stable Yield on RWA Multiple Funding Improving with Negligible Capital Sources Operating Leverag
Slide 12: Positively Geared to a Worsening of the European Macro Outlook
Positively Geared to a Worsening of the European Macro / Public Finances Outlook… Outlook Impact for BFF 1 Increase ▪ Higher demand from customers perception of • Volume ▪ Lower price sensitivity political / • Pricing country risk ▪ Traditional banks less interested in the sector 2 • Loan book
Slide 13: BFF's Receivables Having a Lower Credit Risk Than Short Term Government Bonds
… with BFF’s Receivables Having a Lower Credit Risk Than Short Term Government Bonds Key Considerations ▪ Commercial debt of the Public Sector is not subject to sovereign privilege, unlike sovereign debt: − Public sector’s commercial debt is governed by the local commercial law − No history of hairc
Slide 14: Excellent Growth Opportunities Ahead
Excellent Growth Opportunities Ahead Organic growth opportunity > 10% p.a. volume and loans growth Long-Term Public Increase Market New Markets Expenditure Growth Penetration Growth on the back of HC and Only c. 10% of €270bn PA invoices Potential new PA markets account public expenditure growth are
Slide 15: With Further Growth Opportunities Through M&A
With Further Growth Opportunities Through M&A M&A aimed at consolidating existing businesses and expanding into other underserved markets Existing business Adjacent sectors New niche markets ✓ ✓ Targets profile: Targets profile: ▪ Operating in the same businesses of BFF or in adjacent sectors ▪ Oper
Slide 16: Key Drivers of the 2021 Business Plan
Key Drivers of the 2021 Business Plan Key drivers 2018 2021 Target Key considerations Volumes 17% >10% p.a. ▪ Delay in payments in the Public Sector (“DSO”(1)) stable A ▪ Pricing on RoRWA, without LPI over-recovery growth (YoY) Loans growth 19% >10% p.a. ▪ Volumes and product mix (factoring vs. fina
Slide 17: Organic Growth Volume > 10% per Year in a Large Underpenetrated Market
A Organic Growth Volume > 10% per Year in a Large Underpenetrated Market Opportunities Evolution of BFF’s Addressable Market (€bn) ▪ BFF’s addressable market is the public expenditure in goods and service BFF yearly €1.8bn 2.6x €4.7bn volumes (€270bn in 2018) ▪ Since 2013, BFF has expanded its addre
Slide 18: Loan Growth >10% per Year
B Loan Growth >10% per Year Key drivers / targets Balance Sheet structure March-19 (€m) ▪ Costumer loan growth target >10% @ constant DSOs 4,722 4,722 Growing ▪ Increase in DSO would result in faster loan growth with no additional 159 Other 270 Other loans costs ▪ Bond portfolio less than 20% of tot
Slide 19: P&L to Benefit From Better Funding and Operating Leverage
P&L to Benefit From Better Funding, More C Operating Leverage and Catching Up With Deferred Income Target 2021 ▪ Pricing for non-recourse factoring based on, among other, Cost of Funding, capital absorption and assuming no LPI over-recovery vs. the min. 45% =/ Yield on RWA High yield with ▪ Therefo
Slide 20: Significant Income Deferral due to a Prudent Accounting of Late Payment Interest
Significant Income Deferral due to a Prudent Accounting of Late Payment Interest Accounting of Late Payment Interest (“LPI”) and Income Deferral ▪ Receivables against PA accrues LPIs (regulated by EU law) Therefore, full impacts on P&L of the LPI generated by the when not paid on time @ Central Bank
Slide 21: BFF Banking Group: A Bank Like No Other
BFF Banking Group: A Bank Like No Other® Market leader in large and underpenetrated markets €436bn addressable market Only Pan-European platform 8 EU countries Compelling assets and earnings growth 14% net income CAGR 2013-18 High profitability 37% RoTE Outstanding cost efficiency 36% Cost/Income ra
Slide 22: 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 or assumptions, expectations, p
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