Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Banca Ifis (STU:0I6, Financial) reported a net income of EUR 127 million for the first nine months of 2024, marking a 2% increase year-on-year.
- The company confirmed its 2024 guidance of EUR 160 million net income, indicating confidence in meeting its financial targets.
- The financial position remains robust with EUR 2.1 billion in available cash and cash equivalents.
- The bank's CET1 ratio improved to 16.43% as of September 30, 2024, reflecting a strong capital position.
- Banca Ifis (STU:0I6) has strategically extended the duration of its government bond portfolio to stabilize interest income.
Negative Points
- Revenues in Q3 2024 were EUR 157 million, a decrease of 4% year-on-year due to increased cost of funding.
- There were limited signs of asset quality deterioration, particularly in specific sectors such as automotive and steel.
- The NPL business showed marked seasonality, with a decrease in cash collections and revenues in Q3.
- The bank faces competition in lending to high-rated corporates, which could impact future profitability.
- The cost of funding has peaked and is expected to decrease, but managing the asset side of the balance sheet remains a challenge.
Q & A Highlights
Q: Can you provide any insights into the bottom line for 2025 and how you plan to handle potential interest rate changes?
A: We are confident in continuing to provide attractive returns and dividends. We expect to release significant overlays in the coming 18 months, which will support our financials. Regarding interest rates, we aim to keep the cost of funding below 3.5% in 2025, assuming current rate scenarios hold. We are also introducing a double voting rights scheme to promote shareholder stability.
Q: There was a significant increase in capital ratios between Q2 and Q3. Is this temporary, and how does it relate to your risk strategy?
A: The increase is partly due to a seasonal decrease in loans and benefits from reduced risk density. We expect risk-weighted assets to rise again in Q4 due to seasonality, but overall, we maintain a disciplined approach to risk and are open to growing the asset base if opportunities arise.
Q: Regarding the NPL business, should we expect a recovery in Q4, and are the overlays intact?
A: The seasonality in NPLs was more pronounced than expected, but we have resumed purchasing and do not see this as a trend. Overlays have been used partially, but the majority remain intact, and we plan to release them over the next 18 months.
Q: Can you elaborate on the strong factoring performance despite unfavorable conditions?
A: Our strong client relationships and advanced digital platforms have allowed us to outperform the market. We focus on user experience and efficient processes, which help maintain high spreads and solid performance in the factoring business.
Q: What are your plans for M&A, and how do you view potential opportunities?
A: We are open to M&A opportunities that align with our existing capabilities, do not strain our capital or funding positions, and potentially enhance our funding attractiveness. We have no specific deals to announce but continue to explore options.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
