illimity Bank (ILTY) Q1 2025 earnings summary

Executive summary

• Q1 2025 marked a transition year, with net profit dropping to €0.3 million from €10.8 million in Q1 2024, mainly due to lower net interest income, higher credit risk provisions, and non-recurring costs related to a public tender and takeover bid.

• Core business origination volumes grew 50% year-over-year, with resilient profitability and a low cost of credit at 41 basis points, while strategic repositioning focused on SME lending and investment banking, exiting direct NPE investments.

• Non-core assets related to distressed loans decreased 15% year-over-year, with further reduction expected, freeing capital for core business expansion.

• Capital position strengthened, with CET1 ratio at 14.7% (up from 13.87% at year-end 2024), Total Capital Ratio at 18.9%, and robust liquidity (LCR at 388%, liquidity buffer of €1.3 billion).

• Strategic focus shifted to core SME lending, Corporate & Investment Banking, and Turnaround, with cost base rationalization and exit from NPE investment business underway.

Financial highlights

• Operating income for Q1 2025 was €68.2 million, down 8% year-over-year, with net interest income at €32.1 million (down 19%) and net fees and commissions at €16 million (down 12%).

• Net profit attributable to the parent company was €0.3 million, with pre-tax profit at €1.4 million, both sharply down year-over-year.

• Core business pre-tax profit was €31 million, stable year-over-year, with a cost/income ratio of 21%.

• Loan loss provisions increased to €13.9 million, mainly due to b-ilty and non-core assets, with cost of risk at 41 bps for core business and 137 bps overall.

• Retail deposits rose to €4.0 billion (up 6% quarter-on-quarter), and total funding reached €7.0 billion (up 11% year-over-year), with blended cost of funding declining to 3.7%.

Outlook and guidance

• 2025 is a pivotal transition year, with profitability affected by lower interest rates, non-recurring costs from public tender and restructuring, and extraordinary items, but future profitability expected to benefit from cost reductions and asset disposals.

• Strategic guidance targets net income of €80 million and cost-income ratio of 54% by 2028, with recurring profitability recovery and accelerated derisking.

• CET1 ratio expected to remain robust, projected between 13%-14% going forward.

• Credit quality expected to remain resilient due to prudent provisioning and a high share of loans backed by public guarantees.

• High potential value generation expected from shareholdings, JVs, and partnerships.