Release Date: May 08, 2025
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 strong net income of 47 million euros for Q1 2025, driven by robust performance in commercial banking and the NPL business.
- The company achieved a 7% quarter-on-quarter revenue growth, reaching 179 million euros, despite a challenging interest rate environment.
- Operating costs were effectively controlled, decreasing by 9% quarter-on-quarter, demonstrating strong cost management.
- The bank's CT1 ratio is solid at over 16.5%, well above the regulatory threshold, positioning it well for potential market volatility.
- Banca Ifis (STU:0I6) received an upgrade to a AAA ESG rating from MSCI, highlighting its commitment to sustainability and strong governance practices.
Negative Points
- Revenues were down 3% year-on-year, indicating some challenges in maintaining growth compared to the previous year.
- The commercial spread declined by 10 basis points in the quarter, reflecting pressure on interest margins.
- The NPL business saw a decrease in gross book value by 1.4 billion euros due to portfolio sales, although net book values remained stable.
- The bank expects annual net interest income for 2025 to be down between 6% and 8% compared to 2024, indicating ongoing pressure from the interest rate environment.
- There is uncertainty regarding macroeconomic conditions, including potential impacts from tariffs and exchange rate volatility, which could affect future performance.
Q & A Highlights
Q: What do you expect in terms of net interest income evolution in the coming quarter, and do you see any sign of a macroeconomic slowdown, particularly following the introduction of tariffs by the Trump administration?
A: We expect annual net interest income for 2025 to be down between 6% and 8% compared to 2024. As for macroeconomic slowdown, we currently see no signs of widespread macro risk materializing. However, we will reassess the situation in early July or September to better understand the impact of tariffs and other economic factors.
Q: The commercial spread has declined by 10 basis points this quarter. When do you expect the stabilization of your commercial spread? Also, do you confirm your full-year net income guidance?
A: We expect the overall spread to bottom out around Q3, with a potential recovery thereafter as funding costs decrease and Euribor stabilizes. We confirm our full-year net income guidance, expecting it to be broadly in line with last year, despite the strong Q1 performance.
Q: Can you provide more details on the ECB's request for due diligence regarding the potential acquisition of Limity?
A: The ECB requested due diligence because our offer was unsolicited, and we couldn't conduct it from the outside. This is a standard procedure to verify the target's equity and ensure a reliable number for the bad will. We would have conducted this due diligence regardless of the ECB's request.
Q: Could you provide an indication of the strategy for the NPL segment going forward, including the expected gross book value (GBV) after the sale of portfolio tails?
A: We will continue to sell portfolio tails to maintain a meaningful balance sheet without large amounts of low-value loans. We expect further disposals of similar size to those seen recently. Our strategy includes forward flow agreements with originators to ensure a steady flow of NPL acquisitions.
Q: What is the outlook for cash collection trends in the NPL segment, and how should we think about the tax rate for the full year?
A: We expect cash collections to remain around 100 million per quarter, driven by a focus on streamlining recovery processes. For the tax rate, we anticipate it to stay around 30% for the year, thanks to the application of the patent box due to past IT investments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
