Banca IFIS has strengthened its capital ratios in the first nine months of 2016. Credit cost continues to improve.

Eine Tageszeitung (Symbolbild). pixabay.com

The Bank is waiting for the authorisation from the Supervisory Authority to acquire GE Capital Interbanca

RECLASSIFIED DATA [1]
First nine months of 2016
1 January-30 September

-Net banking income: 237,7 million Euro (-27,6%)
-Net profit from financial activities: 218,2 million Euro (-28,5%)
-Operating costs: 118,7 million Euro (+46,9%)
-Profit for the period: 66,3 million Euro (-55,5%)
-Cost of credit quality for trade receivables: 86 bps
-Bad loans ratio in the trade receivables segment: 1,2%;
-Hiring up: 157 new staff added in the first 9 months of 2016 (+12,1%);
-Common Equity Tier 1 (CET1): 15,8% (15,8% at 31 December 2015) [2] ;
-Total Own Funds Capital Ratio: 15,8% (15,8% at 31 December 2015) [2].

3rd quarter 2016
1 July-30 September

-Net banking income: 86,8 million Euro (+38,4%)
-Net profit from financial activities: 83,0 million Euro (+45,1%)
-Profit for the period: 27,1 million Euro (+50,6%).

Mestre (Venice), 10 November 2016 - The Board of Directors of Banca IFIS met today under the chairmanship of Sebastien Egon Fürstenberg and approved the interim financial report for the first nine months of 2016.
"We are very satisfied with the Non-Performing Loans segment - said Giovanni Bossi, Banca IFIS CEO - It is proving to be capable of seizing opportunities in a constantly evolving market. In this sector, it is crucial to swiftly adopt innovative solutions, ensuring the entire process is always efficient. In the trade receivables sector, which is the Bank's core business, we continue the strategy of refocusing on smaller-sized but more profitable market segments. The number of corporate customers is rising sharply. We are waiting - added the CEO - for the authorisation from the Supervisory Authority to complete the acquisition of GE Capital Interbanca. We have made significant progress on the analyses required to achieve a smooth integration: we believe we will be efficient starting from the closing date".

Highlights for the first nine months (reclassified data )

Here below are the main factors that contributed to the result for the nine months of 2016:
-Net banking income3 totalled 237,7 million Euro, -27,6% from 328,1 million Euro in the first nine months of 2015. Excluding the gain made in April 2015 as part of the rebalancing of the government bond portfolio (124,5 million Euro), at 30 September 2016 net banking income was up 16,7%. There was a significant increase in the DRL segment (112,0 million Euro, +262,7%). Also the trade receivables segment was positive (121,3 million Euro, +2,0%), while Tax Receivables (10,9 million Euro, -5,6%) and Governance & Services were down. The latter posted a negative 6,4 million Euro margin, compared to a positive 166,9 million Euro at 30 September 2015. The reason for this decrease is twofold: the Group recognised in 2015 the gain on the sale conducted as part of the rebalancing of the AFS securities portfolio, reducing interest income in the following periods; and funding costs increased as a result of rising volumes as well as the introduction of 2-, 3-, and 5-year maturities starting in September 2015.
-Net value adjustments [3] totalled 19,5 million Euro. They referred for 15,5 million Euro to loans to customers (compared to 14,9 million Euro at 30 September 2015, +4,1%), and for 4,0 million Euro to impairment losses on unlisted equity securities
-Operating costs totalled 118,7 million Euro, up 46,9% from 80,8 million Euro in September 2015; this was largely attributable to the DRL segment-especially as far as pre-collection and collection costs are concerned. As for personnel expenses, amounting to 41,9 million Euro (36,1 million Euro in September 2015, +16,2%), the increase was the result of new hiring in the first nine months of 2016 (157 staff, +12,1%), consistently with the goal to strengthen some areas and services supporting the business, and especially the DRL segment. At 30 September 2016, the Group's employees numbered 823. The cost/income ratio stood at 49,9% at 30 September 2016, compared to 24,6% at 30 September 2015.
Profit for the period totalled 66,3 million Euro, compared to 148,8 million Euro in September 2015 (down 55,5%).

For a better understanding of the result for the period and the relevant comparative data, the following should be noted:
-Interest receivable and similar income: the item included 9,0 million Euro arising from the reclassification to amortised cost of a sizeable portion of the DRL portfolio following the end of the documentary verification process and the ensuing collection of bills of exchange and settlement plans.
-Gain on the sale of receivables: the item largely consisted of 26,8 million euro in gains on the sale of portfolios of DRL receivables (of which 21,0 million Euro made in the third quarter).
-Gain on the sale of available for sale financial assets, totalling 5,5 million Euro in the first nine months of 2016 as a result of the sale of part of the bond portfolio, compared to 124,5 million Euro in the prior-year period arising from the rebalancing of the bond portfolio.
-Other administrative expenses included the 2,1 million Euro contribution for the whole of 2016 to the Resolution Fund.
-Net allocations to provisions for risks and charges included 2,0 million Euro in the estimated annual ex ante contribution for the FITD ("Fondo Interbancario per la Tutela dei Depositi", Interbank Deposit Protection Fund) on the basis of by the Directive 2014/49/UE (Deposit Guarantee Schemes Directive - DGS).

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As for the contribution of individual segments to the result for the first nine months of 2016, here below is a description of how the sectors that made a significant or greater-than-expected contribution performed:
-Trade Receivables: the net banking income of the trade receivables segment amounted to 121,3 million Euro (+2,0% compared to 118,9 million Euro in the first nine months of 2015). The segment generated 7,5 billion Euro in turnover (+3,2% from 30 September 2015), with 4.930 financed SMEs (up 14,8% compared to the prior-year period) and 2,6 billion Euro in outstanding loans (-7,0% from December 2015).
As for net value adjustments on receivables, they totalled 15,2 million Euro (14,8 million Euro at 30 September 2015, +3,2%). The ratio of credit risk cost concerning trade receivables to the relevant average loan balance over the last 12 months was down to 86 bps from 79 bps at 30 September 2015 and 90 bps at 31 December 2015.
-DRL (Distressed Retail Loans): net banking income amounted to 112,0 million Euro, compared to 30,9 million Euro in the prior-year period (+262,7%). The results for the first nine months of 2016 were positively influenced by the continuing debt collection operations-through bills of exchange and expressions of willingness-as well as the reclassification to amortised cost of a sizeable portion of the portfolio following the end of the documentary verification process and the ensuing collection of bills of exchange and settlement plans, adding nearly 9,0 million Euro to net banking income. Another boost came from the closing of sales that generated 26,8 million Euro in gains, as well as the acceleration in the activation of the plans collected, ensuring a timelier contribution to net banking income. In the period, the Bank revised the compensation policy for debt collection networks, aligning the payment of the commission with the accounting activation of the relevant plan.
-G&S (Governance and Services): net banking income was down 103,9%, from a positive 166,8 million Euro to a negative 6,4 million Euro. This was largely the result of the rebalancing of the securities portfolio completed in April 2015, reducing interest income in the following periods, as well as of the increase in funding costs because of rising volumes as well as the introduction of 2-, 3-, and 5-year rendimax maturities. This was partly offset by the sale of 2,1 billion Euro worth of government bonds in the first half of 2016, resulting in a 5,5 million Euro gain. As for retail funding, it was slightly above 4,0 billion Euro (3,1 billion Euro at the end of 2015). The relevant cost amounted to 1,42%, compared to 1,22% in September 2015, and is expected to rise marginally as a result of the new rendimax maturities.

Concerning the statement of financial position, here below is the breakdown of net non-performing exposures in the trade receivables segment alone:
-Net bad loans amounted to 31,9 million Euro, +3,2% from the end of 2015; the segment's net bad-loan ratio was 1,2%, compared to 1,1% at 31 December 2015. Net bad loans were unchanged from 31 December 2015, amounting to 5,4% as a proportion of equity. The coverage ratio stood at 88,1% (87,9% at 31 December 2015);
-The balance of net unlikely to pay was 49,6 million Euro, +25,4% from 39,6 at the end of 2015. The increase was largely attributable to a number of individually significant positions previously classified under net non-performing and performing past due exposures. The coverage ratio stood at 32,6% (32,1% at 31 December 2015)
-Net non-performing past due exposures totalled 130,0 million Euro, compared with 58,2 million Euro in December 2015 (+123,4%). The increase was attributable to past due loans due from the Public Administration that were purchased outright, rising from 1,2 million Euro at the end of 2015 to 48,4 million Euro at 30 September 2016 (with 47,5 million Euro referring to the multi-utility segment). The coverage ratio stood at 1,7% (2,6% at 31 December 2015)

At 30 September 2016, consolidated Equity was 586,6 million Euro, compared to 573,5 million Euro at 31 December 2015 (+2,3%). The change was largely attributable to the 66,3 million Euro profit for the period and the 40,3 million Euro dividend payout for 2015.
As for capital adequacy ratios, the Total Own Funds Capital Ratio was 14,5% (14,9% at 31 December 2015) and the Common Equity Tier 1 (CET1) 13,5% (14,2% at 31 December 2015).
Consolidated own funds, risk-weighted assets and solvency ratios at 30 September 2016 were determined based on the regulatory principles set out in Directive 2013/36/EU (CRD IV) and Regulation (EU) 575/2013 (CRR) dated 26 September 2013, which were transposed in the Bank of Italy's Circulars no. 285 and 286 of 17 December 2013. Article 19 of the CRR requires to include the unconsolidated holding of the banking group in prudential consolidation. The capital adequacy ratios of the Banca IFIS Group alone, presented exclusively for information purposes, would be as showed in table in the attached press release.
The supervisory authorities have informed the Bank of its new minimum capital requirements, which are the following: Common Equity Tier 1 (CET1) 7%; Tier 1 Ratio 8,5%; Own Funds Capital Ratio 10,5%. In light of the Bank's capital adequacy ratios at 30 September 2016, its position is especially robust.

For more details, please refer to the Consolidated Interim Financial Report at 30 September 2016, available under the "Corporate governance" Section of the website www.bancaifis.com

Declaration of the Corporate Accounting Reporting Officer

Pursuant to Article 154 bis, Paragraph 2 of the Consolidated Law on Finance, the Corporate Accounting Reporting Officer, Mariacristina Taormina, declares that the accounting information contained in this press release corresponds to the company's accounting records, books and entries.

[1] Net value adjustments on DRL receivables, totalling 23,6 million Euro at 30 September 2016 compared to 3,0 million Euro at 30 September 2015, were reclassified to Interest receivable and similar income to present more fairly this particular business, for which net value adjustments represent an integral part of the return on the margin.

[2] The reported total Own Funds refers only to the scope of the Banca IFIS Group, thus excluding the effects of the prudential consolidation in the parent company La Scogliera S.p.A. Common Equity Tier 1 capital includes the profit for the period net of estimated dividends. The financial statements attached to this press release show also total Own Funds including said effects.

[3] Net value adjustments on DRL receivables, totalling 23,6 million Euro at 30 September 2016 compared to 3,0 million Euro at 30 September 2015, were reclassified to Interest receivable and similar income to present more fairly this particular business, for which net value adjustments represent an integral part of the return on the investment.

Banca IFIS S.p.A.
Head of Communication
Mara Di Giorgio
Mobile: +39 335 7737417
mara.digiorgio@bancaifis.it
www.bancaifis.it

Press Office and PR
Chiara Bortolato
Mobile: +39 3669270394
chiara.bortolato@bancaifis.it

Banca IFIS 9 months_ENG

This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Banca IFIS S.p.A. via Globenewswire

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