- OPERATING PROFIT at 33.5 million euro, a rise of 72% y/y
- NET PROFIT of 15.7 million euro (+25% y/y)
- The strongest ever first quarter in terms of new business generation, taking customer loans and investments to over 2.8 billion euro (+27% y/y) and total assets to 4.9 billion euro
- Asset quality and capital base remain at excellent levels in the banking system: Organic NPE Ratio at 0.7% and CET1 Ratio at 17.7%
- Successful launch of B-ILTY and QUIMMO, highly innovative digital initiatives
- Reinforcement of leadership in the management of large ticket corporate real estate UTP loans through the purchase of AREC with over 2 billion euro corporate UTP under management
Milan, 11 May 2022 – Chaired by Rosalba Casiraghi, the Board of Directors of illimity Bank S.p.A. (“illimity” or the “Bank”) yesterday approved the illimity Group’s results at 31 March 2022.
illimity continued its growth path also in the first quarter of 2022, in line with the trajectory forecast in its 2021-25 Strategic Plan, posting a net profit of 15.7 million euro, representing an increase of 25% over the first quarter of 2021 (12.6 million euro).
More specifically, the quarter was characterised by:
- the best ever first quarter in terms of new business volumes, with loans and investments of more than 330 million euro originated in the first quarter of 2022, more than double the figure for the first quarter of the previous year. The Bank’s business divisions all displayed great vivacity, contributing to the significant momentum in the quarter;
- a robust upswing in revenue to reach 78.5 million euro (+41% y/y, +1% q/q) in the first quarter of 2022, increasingly diversified and well-balanced between the net interest income and non-interest income components. The Distressed Credit Division continued its position as the main contributor, generating 69% of total revenues earned in the quarter, while the Growth Credit Division posted revenue growth of over 50% compared to the first quarter of 2021, taking its contribution to consolidated revenues to around 19%;
- a continuous improvement in operating leverage: the Cost income ratio stood at 57% in the first quarter of 2022, a decrease of 8 percentage points over the same period of the previous year and 5 percentage points over the previous quarter;
- thanks to the above dynamics, an operating profit of 33.5 million euro, representing a significant rise on both an annual basis (+72% over the figure of 19.5 million euro posted in the first quarter of 2021) and a quarterly basis (+14% over the figure of 29.4 million euro for the fourth quarter of 2021);
- a pre-tax profit of 24.1 million euro, representing an increase of 26% on an annual basis (and 98% on a quarterly basis), despite impairments to organic credit based on an approach that remained prudent also in the quarter and value adjustments to part of the existing portfolio of the Distressed Credit Division, arising physiologically from the regular review of the business plans of each loan and the relative recovery strategies;
- the excellent quality of organic loan book: at 31 March 2022 the ratio between gross doubtful organic loans and total gross organic loans originated since the start of illimity’s operations stood at 0.7%, a figure becoming 2.3% if the loan portfolio of the former Banca Interprovinciale is included. The annualised organic cost of risk for the quarter stood at 13 bps;
- a robust capital base with ratios positioned at the top levels of the system – a CET1 ratio of 17.7% (18.1% pro-forma with the inclusion of the special shares), a Total Capital Ratio of 23.2% (23.6% pro-forma) – and, despite the significant deployment of funds in new loans and investments, a sound liquidity position (of approximately 1 billion euro).
Two initiatives with high technological features were launched in the first part of 2022, in execution of the 2021-25 Strategic Plan:
- February saw the launch of b-ilty, the first digital business store for credit and financial services developed by illimity for SME having revenues of between 2 and 10 million euro. Although currently at the test phase (“beta”) for finalising the offer and the operating platform, b-ilty can already count on around 100 active relationships;
- the beginning of April saw the launch of Quimmo, innovative proptech, a development of neprix Sales, already a remarketing leader in the judicial property sales market with 564 real estate properties sold in the first quarter; the launch of Quimmo marks the entry in the free property market with a new brand and an innovative platform.
The possibilities of serving large markets and creating future partnerships, together with the typical scalability of such initiatives arising from their high technological content, are all factors that will determine a strong growth potential for the results of the two initiatives and lead to a significant contribution to the illimity Group’s results.
Lastly, illimity reached an agreement for the acquisition, through incorporation of a new company, of 100% of Aurora Recovery Capital S.p.A. (“Arec”), a company specialised in managing Unlikely to Pay (“UTP”) loans with a focus on the corporate real estate segment. The operation is subject to the approval of the Supervisory Authority and illimity’s Shareholders’ Meeting, as well as to the occurrence of standard conditions precedent for this kind of transaction. With the subsequent integration of Arec in neprix, the latter will further strengthen its market positioning and significantly expand the number of its third party servicing mandates, increasingly asserting itself as a market servicer and being able to count on a consolidated experience, a brand and a high level of reliability recognised by the market. This transaction is expected to lead to significant synergies:
- in servicing activities deriving from the further opening up of neprix to third party asset management mandates;
- in strengthening deal structuring expertise – which it is expected will generate additional fees from complex transactions originated by the illimity Group;
- in terms of optimisation of management and subsequent value-enhancement of the real estate assets under management – which will translate into higher divestment values with positive effects on the performance of managed loans;
- in co-investment opportunities for illimity alongside other investors in UTP positions identified on the market, including in senior financing.
Management estimates that the acquisition and potential synergies above mentioned will have a positive effect on the illimity Group’s pre-tax profit of around 8 million euro in 2023 and around 11 million euro in 2025, incremental to the targets included in the 2021-25 Strategic Plan. As of 2025, pre-tax profit of the combined entity would therefore set at over 30 million euro. For further information about the transaction, please refer to the press release published today.
Corrado Passera, CEO and Founder of illimity, commented: “The solid results we have achieved in the first quarter allow us to look ahead to the rest of the year with great optimism.
In this respect a new growth phase has opened up for illimity: our markets of reference – performing, restructuring and distressed credit – will become even bigger in the current scenario, and the significant generation of new investments and loans in the first quarter, together with the robust pipeline, indicate that this trend will continue.
We are proud to have launched two highly technological initiatives over the past few months which are capable of further supporting illimity’s growth path and can serve enormous markets with unsatisfied needs: b-ilty, the first complete digital platform for credit and financial services for SMEs, and Quimmo, the extremely innovative proptech that will revolutionise the free property market. If to these we add HYPE, which continues to consolidate its leadership on the Italian fintech market, we can truly say that illimity is increasing its technological component even further and significantly, driving growth and value creation for all our stakeholders.
In addition, the purchase of Arec enables us to strengthen our positioning in UTP credit management with a particular focus on the large ticket corporate real estate segment and puts us in a position for grasping the key market opportunities that will arise in the future.
Lastly, there is a very rich pipeline of new business opportunities and, as forecast, 2022 will be the year when the first significant synergies with the ION Group will start materialising.
The first results for 2022 are in line with the growth and earnings trajectory included in the 2021-25 Strategic Plan (net profit exceeding 240 million euro in 2025), as confirmation that our business model remains sound even in the current macroeconomic situation.”
For more details view the entire announcement: https://assets.ctfassets.net/0ei02du1nnrl/23UM8ZJlWJqTTKdXhzOyzW/f3c942cb2588f3c7e93dba0f40e8e7f0/illimity_1Q22_Results.pdf
(1) Related to the business originated by illimity, excluding the loan portfolio of the former Banca Interprovinciale. (2) Calculated as the ratio between loan loss provisions and net organic loans to customers at 31 March 2022 (1,679 million euro) for the Factoring, Cross-over, Acquisition Finance and Turnaround segments and for loans purchased as part of investments in distressed credit portfolios that have undergone a passage of accounting status subsequent to acquisition or disbursement (excluding loans purchased as bad loans), the loan portfolio of the former Banca Interprovinciale and Senior Financing to non-financial investors in distressed loans.