Banca IFIS S.p.A. · MIL:IF
Banca IFIS — H1 2020 Earnings Presentation
40 slides from Banca IFIS's earnings presentation, Aug 6, 2020
Slide 1: 1H 2020 results
C <,> Banca lfis 1H 2020 results 6 August 2020
Slide 2: Index
Index 1. 1H 20 summary results and preliminary 2020 guidance 2. Focus on 2Q 20 results 3. Appendices 3.1 Segment results 3.2 Consolidated financial data 3.3 La Scogliera: implications of CRD IV 3.4 Focus on PPA 2
Slide 3: 1H 20 summary results and preliminary 2020 guidance
1 1H 20 summary results and preliminary 2020 guidance
Slide 4: 1H 20 summary results
1H 20 summary results •1 1H 20 net income of €37mln, after 36mln (pre tax) provisions/write offs due to Covid 19 o In addition to €36mln provisions/write offs, there are other direct and indirect impacts of Covid-19 mainly due to the slowdown in judicial and extrajudicial NPL workouts. Including a p
Slide 5: Preliminary 2020 guidance
Preliminary 2020 guidance (€ mln) Min Max • The slowdown in commercial activity due to Covid-19 impacted all business units Net banking income 420 440 • Prudently, the Board of Directors suspended the Loan loss provisions (LLP) -100 -85 economic and financial objectives included in the 2020- Net inc
Slide 6: Preliminary 2020 guidance: net banking income
Preliminary 2020 guidance: net banking income • Progressive improvement of workout in Npl Net banking income Illustrative o In 4Q 20, courts open for the entire quarter, after having been hut down in March, April and May due to lockdown and in August due to seasonality 106.0 106.8 o Cash collection
Slide 7: Preliminary 2020 guidance: loan loss provisions
Preliminary 2020 guidance: loan loss provisions Loan loss provisions (Commercial & Corporate Banking, Non core & G&S) • In 4Q 20, potential asset quality deterioration in commercial, corporate and non core Illustrative o Expiring of the moratoriums envisaged by Italian banking association and by Dec
Slide 8: Customer loans: Commercial & Corporate banking
Customer loans: Commercial & Corporate banking* Banca Ifis’s Commercial & Corporate banking portfolio includes €0.8bn towards PA; the remaining portfolio is well diversified in terms of sector, geography and size to face the potential impact of the current macroeconomic slowdown (€ bn) 2Q 20 Descrip
Slide 9: Focus on 2Q 20 results
«> Banca fis Focus on 2Q 20 results
Slide 10: 2Q results - Significant improvement in CET1
2Q 20 results - Significant improvement in CET1 ✓ 2Q 20 net income of €10.3mln: o ~ -€21mln (pre tax) provisions/write offs due to the Covid 19 in 2Q 20. Further direct and indirect impacts of Covid-19 mainly due the slowdown in judicial and extrajudicial NPL workouts o ~ -€7mln (pre tax) provisions
Slide 11: Quarterly and half year results
Quarterly and half year results (€ mln) 1Q 20 2Q 20 1H 19 1H 20 1 Net banking income impacted by the slowdown in Net interest income 91.4 78.3 233.6 169.7 judicial and extrajudicial Npl workout and lower Net commission income 21.1 18.7 46.5 39.8 Trading and other revenues (6.6) 2 9.9 3 (0.9) 3.3 vol
Slide 12: Illustrative impact due to Covid-19 in 1H 20
Illustrative impact due to Covid-19 in 1H 20* Provisions/write offs due to Covid19: -€36mln (pre tax) 1• Lower net baking income to prudently reflect longer recovery Provisions/write offs due to Covid-19 (€ mln) 1H20 timeframe and slightly lower cash recovery in 2020 in Npl 1 Lower net baking income
Slide 13: 2Q 20 Results: P&L break-down by business unit
2Q 20 Results: P&L break-down by business unit* Commercial & Corporate • 1 Npl workout was impacted by the courts banking shut down Corp. Banking Non core Data in € mln Npl Factoring Leasing & Lending & G&S Consolidated •2 Mainly trading gains on proprietary portfolio Net interest income 27 22 10 5
Slide 14: Seasonality in Npl and PPA and effect of Covid-19
Seasonality in Npl and PPA and effect of Covid-19 1Q 20 results* Source: management accounting data Net interest income in Npls* 73 66 2020 was 53 54 54 impacted by 43 40 court shutdown 27 IQ IIQ IIIQ IVQ IQ IIQ IIIQ IVQ IQ IIQ 2018 2019 2020 Reversal of PPA ex-IB (pre-tax)* Capital gains from Npl d
Slide 15: Capital structure
Capital structure B IFIS 14.59% 15.45% scope* • CET1 +0.46% QoQ mainly due to RWA decrease La driven by new SME supporting factor (+0.29%) and 0.49% 0.11% 0.08% -0.22% 11.58% Scogliera 11.12% lower commercial activity scope* RWA Realization Other Lower Decrease of DTAs valuation minorities • CET1 of
Slide 16: Appendices
Bancalfis Appendices
Slide 17: 3.1 Segment results
> Banca Ifis 3.1 Segment results
Slide 18: Factoring
Factoring* Turnover - €bn • Factoring net loans -3.7% QoQ and -10.8% YoY due to commercial activity slowdown driven by Covid-19 outbreak o Stripping out 2 positions whose businesses were temporarily stopped due to Covid-19, the factoring net loans would be down 6.4% YoY 3.4 3.5 3.2 2.6 o Ca. 50% of
Slide 19: Leasing
Leasing* New business - €mln • New leasing -48% YoY due to commercial activity slowdown 165 165 111 86 driven by Covid-19 outbreak 23 23 • In 2Q 20, customer loans amounted to €1,397mln (-0.5% QoQ) due to lower volumes 64 50 26 15 • The impact of Covid-19 on loan loss provisions is mitigated 25 by s
Slide 20: Npl Business: portfolio evolution
Npl Business*: portfolio evolution Key numbers* Npl portfolio evolution • 1.9mln tickets, #1.3mln borrowers NBV** 1,269 1,305 • Extensive portfolio diversification by location, type and age of €mln borrower NPLs acquired in 2Q: €0.6bn GBV GBV €bn 17.8 +0.6 -0.2 18.2 • In 2Q 20, Banca Ifis purchased
Slide 21: Npl Business: ERC
Npl Business*: ERC ERC assumptions ERC: €2.6bn • ERC based proprietary statistical models built using internal historical data series and homogeneous clusters of borrowers 1.1 o Type of borrower, location, age, amount due, employment 2.6 status o Time frame of recovery 2.5 1.5 o Probability of decay
Slide 22: Npl Business: GBV and cash recovery
Npl Business*: GBV and cash recovery Judicial recovery Non judicial recovery – Voluntary plans Judicial recovery (€ mln) GBV % Ongoing GBV, data in €mln Freezed** 2,627 42% processing 371 380 403 413 407 283 317 325 328 335 340 352 271 276 Court injunctions [“precetto”] and foreclosures 595 9% Towar
Slide 23: Npl Business: cash recovery and P&L contribution
Npl Business*: cash recovery and P&L contribution P&L Contribution • In 2Q 20, the new issues of court injunctions (“precetto”), foreclosures (“pignoramento”) and order of assignments were temporarily stopped due to court shut down. During lockdown, judicial Npls did not increase in value, providing
Slide 24: Npl Business: stock by recovery phase
Npl Business*: stock by recovery phase Average GBV 2Q20 Cash Cluster % total Description time Accounting valuation €mln proceeds frame** Waiting for workout - Recently acquired, under analysis to select the Positions 1,709 9% best recovery strategy, to be assigned either to 6 months Acquisition cost
Slide 25: Npl Business: GBV and NBV evolution
Npl Business*: GBV and NBV evolution GBV - €mln 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 2Q 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 1,709 Extrajudicial positions 8,050 8,145 9,667 8,956 9,745 9,862 9,574 10,378 10,619 10,257 - Ong
Slide 26: Npl Business: P&L and cash evolution
Npl Business*: P&L and cash evolution P&L - €mln 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 2Q 20 Waiting for workout - Positions at cost Extrajudicial positions 21 13 13 17 19 19 19 20 17 10 - Ongoing attempt at recovery 2 (3) (3) (4) (3) (2) (1) 4 (4) (3) - Non-judicial payment plans 19
Slide 27: Npl Business: portfolio diversification
Npl Business*: portfolio diversification Breakdown of GBV by type Breakdown of GBV by borrower age Other 18-39 2% 13% Banking >60 31% 53% 40-49 Consumer 27% 45% 50-59 29% Breakdown of GBV by ticket size Breakdown of GBV by region 5k North 11% 32.1% > 100k 26% from 5k to South & Island Center 20k 30%
Slide 28: 3.2 Consolidated financial data
3.2 Consolidated financial data
Slide 29: Customer loans
Customer loans Customer loans (€ mln) 8,034 • In 2Q 20 customer loans in G&S increased by ca. 7,651 7,601 €0.5bn due to the purchase of short term Government bonds booked at amortized cost 946 1,073 1,562 747 879 906 • In 2Q 20, Commercial and Corporate banking loans were down 1.7% QoQ due to the sl
Slide 30: Funding
Funding Funding (€mln) • Retail deposit base proved to be resilient. Ongoing 8,463 8,468 9,171 diversification into German deposits. Lengthened the duration of Rendimax deposits: more than 80% of total term 271 deposits with duration >2Y 167 223 792 791 2,000 • Reached the target of 50% balance betw
Slide 31: Proprietary portfolio
Proprietary portfolio* Strategy • Long term «fundamental» view with opportunistic trading approach • Efficient management of excess cash (ECB deposits) • Use of enhancing and hedging strategies coupled with both risk and expected credit loss control • Low cumulative RWA level and ECB / funding eligi
Slide 32: Asset quality – 2Q 20
Asset quality – 2Q 20 Asset quality (€ mln) • Npl Business not included in this analysis Commercial & • NPE ratios in Commercial & Corporate Banking Gross Coverage % Net reported a slight decrease QoQ, due to the increase in Corporate Banking Bad loans 203 80% 40 customer loans: UTPs 193 49% 98 o Gr
Slide 33: Consolidated operating costs
Consolidated operating costs Operating costs (€mln) • 2Q 20 operating costs ~ +€8.5mln vs. 1Q 20, mainly driven by: - ~ -3.4mln in cost of personnel due to lower expected variable 81,7 82,0 74,0 73,5 compensations 64,9 - ~ +11.8mln in other operating costs mainly due to ~€7mln provisions to solidari
Slide 34: 3.3 La Scogliera: implications of CRD IV
3.3 La Scogliera: implications of CRD IV
Slide 35: La Scogliera: implications of CRD IV
La Scogliera: implications of CRD IV • The application of the 2013/36/EU (CRD IV) Directive and EU Regulation La Scogliera S.p.A. 575/2013 (CRR) envisages that 49.2% of the excess capital of the Banca Consolidating Group entity Ifis Group Scope is not included in the CET1 of La Scogliera Group Scope
Slide 36: La Scogliera: Focus on DTA regulatory implications
La scogliera: Focus on DTA regulatory implications • DTAs related to write downs of loans convertible into tax credits (under Law 214/2011) Data in €/mln Convertible DTAs • Their recovery is certain regardless of the presence of future taxable income and is defined by fiscal law (range ca. 5%-12% pe
Slide 37: 3.4 Focus on PPA
> Banca Ifis 3.4 Focus on PPA
Slide 38: Focus on ex-Interbanca PPA
Focus on ex-Interbanca PPA* • In 2016, following the acquisition of former Net customer loans and PPA - €mln Interbanca, Banca Ifis valued the performing and non performing loans of Interbanca by Performing: 64.9 455 PDs: 0.5 applying a market discount and a liquidity UTPs: 15.7 discount to reflect
Slide 39: 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,
Slide 40: Banca Ifis
“> Banca Ifis