Banca IFIS (IF) Q3 2024 earnings summary

Executive summary

• Net profit for the first nine months of 2024 reached €126.6 million, up 1.5% year-over-year, with comprehensive income at €131.1 million and Q3 net income flat year-on-year at €33 million.

• Net banking income rose 3.8% to €531.8 million, driven by growth in Commercial & Corporate Banking and NPL Segments, offsetting higher funding costs.

• Interim dividend of €1.2 per share (€63 million total) approved, to be paid in November 2024, with a payout ratio of about 49.8%.

• Guidance for full-year 2024 net income/profit confirmed at €160 million, in line with business plan targets.

• Financial position remains robust with €2.1 billion in cash and full TLTRO repayment completed in 2024.

Financial highlights

• Net banking income for 9M24 was €531.8 million (+3.8% YoY); net profit attributable to Parent Company was €126.6 million (+1.5% YoY).

• Commercial banking revenues in Q3 were €93 million, up from €84 million in Q3 2023; factoring turnover stable year-on-year, outperforming a market decline of 4%.

• NPL revenues in Q3 were €55 million, reflecting seasonality and Revalea integration; NPL cash collections in Q3 were €97 million, with Revalea contributing €14 million.

• Operating costs in Q3 were €94 million, with a decrease in other operating costs by €6 million quarter-on-quarter; 9M24 operating costs rose 5.9% to €299.7 million, mainly due to higher personnel and ICT expenses.

• Loan loss provisions for Q3 were €13 million; credit risk losses for 9M24 improved to €28.9 million.

Outlook and guidance

• 2024 net income/profit guidance confirmed at €160 million.

• Moderate loan demand expected as corporates streamline funding amid economic slowdown and increased competition.

• Cost of funding has peaked and is expected to decrease, with a target below 4.0% for 2024 and below 3.5% in 2025 if market conditions allow.

• Asset quality outlook remains benign, though normalization of cost of risk is expected over the next couple of years.

• NPL business to gradually decrease in weight, with a shift toward asset management models, selective acquisitions, and partnerships.