Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Banca Sistema SpA (FRA:B2S, Financial) reported a 19% year-on-year revenue growth in the first nine months of 2024, driven by strong performance in adjusted net interest income.
- Factoring turnover showed a double-digit growth of 12% year-on-year, indicating robust commercial dynamics.
- The pawn loans business experienced a 9% year-on-year increase in outstanding, with total turnover rising by 28% year-on-year.
- Adjusted pre-tax profit increased by 37% year-on-year to EUR 26.2 million, while adjusted net profit rose by 27% year-on-year to EUR 15.8 million.
- The CET1 ratio and total capital ratio fully phased improved year-on-year, reflecting a strong capital position with ample buffers.
Negative Points
- The cost of risk increased slightly year-on-year to 20 basis points from 18 basis points in the first nine months of 2023.
- Operating costs, including systemic charges, grew by 17.6% year-on-year, partly due to the accounting of deposit guarantee scheme provisions.
- The CQ loans turnover grew by 16% year-on-year, but the outstanding decreased by 10% due to prepayments and portfolio disposals.
- Interest expenses showed only a slight decrease quarter-on-quarter, indicating persistent funding cost pressures.
- The CQ business continued to contribute negatively to the group's net profit, highlighting ongoing challenges in this segment.
Q & A Highlights
Q: Can you provide some insights on the funding cost going forward, especially considering the ECB's potential rate cuts and the performance of different divisions like factoring and pawnbroking?
A: Unidentified_5: The cost of funding in Q3 was 3.52%, showing a decrease from Q2. We expect it to trend lower in Q4, potentially below 3.5%. For 2024, the average funding cost is projected at 3.6%. If the ECB cuts rates faster than expected, there might be an upside in our funding cost expectations for 2025 and 2026. The focus will remain on divisions like factoring and pawnbroking, which are performing well.
Q: What are your expectations regarding the significant risk transfer and its impact on your CQ business?
A: Unidentified_5: The significant risk transfer is part of our business plan and will cover only the secure asset, freeing up around 100 million in RWAs. This capital will be allocated to the factoring business, which offers higher returns compared to the CQ business. The CQ business will not receive this freed-up capital.
Q: Could you elaborate on the contribution from your Portugal acquisition and its impact on your growth story?
A: Unidentified_6: The Portugal acquisition involved assets worth EUR16 million and operates through 16 branches. The contribution to net income for 2024 will be negligible due to transaction costs, but we expect it to contribute over EUR1 million in 2025 and slightly less than EUR1.5 million in 2026, without accounting for any specific growth.
Q: How do you foresee the trading gains from the Superbonus portfolio evolving in the coming years?
A: Unidentified_6: For 2024, the contribution from trading Superbonus is expected to peak at over EUR30 million. While this will be the highest contribution year, we anticipate meaningful contributions in the following years, with around EUR20 million in 2025 and slightly less in 2026, based on current origination levels.
Q: Can you comment on the competitive landscape in the factoring market, especially concerning public administration?
A: Unidentified_5: We haven't observed a significant decline in activity as we are diversified across various public administration sectors. While healthcare has seen a decline, other areas like renewable subsidies and entertainment remain active. Our turnover has remained stable and positive throughout the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
