Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Illimity Bank SpA (LTS:0A3J, Financial) reported a robust liquidity position with a liquidity buffer of nearly EUR900 million in cash and government bonds.
- The bank's core Tier 1 ratio is strong at 15.6%, exceeding targets by 650 basis points, and the total capital ratio stands at 20.3%.
- Net interest income and net commissions experienced a double-digit growth in Q1 2023 compared to the same period last year, with a combined growth of over 30%.
- The strategic partnership with Engineering Group for the IT platform is expected to drive substantial profitability in 2023 and beyond.
- The SME business showed impressive performance with net customer loans surging by 49% year on year to reach EUR2.3 billion.
Negative Points
- The distressed credit market remained soft in the first quarter, affecting both investments and disposals, leading to a lower pre-tax profit.
- The cost of funding increased to 2.7% in Q1, which was higher than initially expected for the full year.
- The organic NPL ratio increased to 3.7%, mainly due to some exposures moving to the non-performing category.
- Other income comparability with the first quarter last year was affected by the termination of the previous IT platform license agreement.
- The revenue from closed positions was lower compared to the first quarter of the previous year, influenced by a very important disposal in Q1 2022.
Q & A Highlights
Q: Can you clarify the guidance for net income over EUR100 million, considering the impact of the new IT partnership?
A: We have adjusted our guidance to indicate that we will exceed EUR100 million, but we are not providing more detailed figures at this time. The partnership with Engineering will positively impact our results, and we will provide further guidance in the upcoming quarters.
Q: What is the outlook for the cost of funding, given the current 2.7% rate?
A: The blended average cost of funding for the quarter was 2.7%, which aligns with our full-year guidance. We expect the cost of funding to remain below 3% for the year, with a slight increase due to market rates and funding mix adjustments.
Q: Can you provide more details on the expected royalties from the partnership with Engineering?
A: We anticipate a significant flow of royalties, potentially amounting to many dozens of millions, contributing substantially to our business plan results. However, it is premature to provide precise figures.
Q: What is the guidance for the non-performing loans (NPL) to performing loans ratio for the rest of the year?
A: We expect some volatility in the NPL ratio, but with a large portion of our exposure guaranteed or insured, the cost of risk should remain stable. We anticipate the ratio to stay around current levels.
Q: How do you view the distressed credit market, given the current low activity levels?
A: The first quarter was soft, but we have a strong pipeline for the coming months. We expect to meet our budget expectations for the full year, despite the current market conditions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
