Banca Sistema SpA (MIL:BST)

Q2 2026 Banca Sistema S.p.A. Earnings Call Transcript

Aug 6, 2026 / 03:00 PM GMT

Release Date Price: €1.6 (-0.37%)

Transcript

Key Points

Positve

Integration is on or ahead of schedule, with the mandatory tender offer closed and the reverse merger approved, positioning the company for a complete two-bank merger in seven months.
New volumes surged 36% year-on-year to $3.8 billion, driven by strong growth in factoring (up 29%), NHS and PA (up 65%), and tax credit (up 70%), indicating the removal of previous capital constraints.
Adjusted profit before tax on an aggregated basis improved to $22.3 million in H1 2026 from $13 million in H1 2025, reflecting enhanced operational performance.
The securitization of NPEs related to public administration exposure is structured to have zero economic impact (sale at net book value) and is expected to release capital, with binding agreements already signed with a third-party investor.
The assurance process on the new definition of default rules is complete, with no material findings in collection procedures, IT, or operations, and the company expects no further extraordinary provisions on this topic.
Capital position is expected to improve further, with CET1 ratio projected to reach 12%-12.2% by year-end, supported by the deconsolidation of KK and the closure of a credit line.
The company is actively exploring M&A opportunities to grow scale, expand internationally, and reduce cost of funding, with a focus on accretive deals.
Cost of funding target is set at Euribor plus 20-25 basis points, indicating a disciplined approach to liability management.
The NPE coverage ratio increased to 32%, and the company has a 100% hit ratio on guaranteed collections from SACE/MCC, underscoring robust risk management.
The legacy business is in runoff, and the company is strategically reviewing the salary-backed loan business to improve overall profitability.

Negative

The consolidation perimeter is complex and moving, with Q1 and Q2 including different entities (CF+ and Banca Sistema, but not KK), making financial comparisons challenging for investors.
The assurance process resulted in an additional €40 million of past due exposures and €11.9 million of impairments, increasing the net NPE ratio from 9.4% to 11%.
The badwill of €96.6 million is a significant extraordinary item, and while it is IFRS-compliant, it may distort reported profitability and is subject to further adjustments.
Integration and transaction costs of €10.9 million have been incurred, and additional costs are expected in H2 2026, though the company did not provide a specific figure.
The salary-backed loan business is under scale and not performing well, with a return of only 2%, and the company expects it to turn negative once operating costs are fully allocated, necessitating a strategic review.
The financing business, primarily guaranteed lending, saw volumes decline 44% year-on-year due to the temporary unavailability of the SACE guarantee scheme in Q1.
The securitization transaction is still subject to Bank of Italy authorization, and its benefits (capital release and past due reduction) are not yet reflected in the financials.
The CET1 ratio decreased from 11.4% to 11% in H1, impacted by the assurance process and PPA adjustments, though partially offset by KK deconsolidation.
The company's cost of risk is expected to normalize at 60-70 basis points for the full year, which is higher than the recurring 43 basis points reported, indicating potential credit quality challenges.
The PPA process is still ongoing and may lead to further adjustments to the badwill and other balance sheet items, creating uncertainty for investors.

Refinitiv StreetEvents Event Transcript
E D I T E D V E R S I O N

BSTA.MI - Banca Sistema S.p.A.
Q2 2026 Banca Sistema S.p.A. Earnings Call
Aug 06, 2026 / 03:00PM GMT

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Presentation
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Unidentified_1 [1]
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Good afternoon, this is the Corus Call conference operator. Welcome and thank you for joining the Banca system, our first half 2026 results conference call.

As a reminder, all participants are in listen-only mode and after the presentation there will be an opportunity to ask questions.

Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on the telephone.

At this time, I would like to turn the conference over to Mr. Cristian Carese, Head of Investor Officer. Please go ahead, sir.

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Unidentified_2 [2]
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