Banca IFIS (IF) H2 2023 earnings summary

Executive summary

• FY23 net profit was a record €160.1mln, up 13.5% YoY and excluding PPA; core net income of €160mln exceeded the €137mln Business Plan target by 16.8%.

• Net banking income rose 3.5% to €704.6mln as higher revenues and lower credit costs supported profitability amid higher funding costs.

Financial highlights

• FY23 revenues were €704.6mln, up 4% YoY; 4Q23 revenues were €192.3mln, stable YoY and up 17% QoQ.

• 4Q23 net income was €35.4mln, versus €33.7mln in 3Q23 and €36mln in 4Q22; operating costs rose to €118.6mln from €91.4mln QoQ.

• FY23 net interest income was €566.2mln versus €548.3mln; net commission income was €98.2mln versus €93.5mln. Operating costs rose 4.0% to €405.8mln; cost/income ratio was 57.6%.

• Net credit risk losses fell to €52.4mln from €77.5mln, including €14mln of provisions against potential macroeconomic risks; 4Q23 provisions were €21.5mln, including €10mln on structured-finance exposures.

• Pre-tax profit from continuing operations was €237.6mln; profit for the year was €161.9mln and attributable net profit was €160.1mln.

Outlook and guidance

• FY24 net profit target of ~€160mln reaffirmed, conditional on no significant macroeconomic or geopolitical deterioration; outlook assumes slower growth and higher funding costs.

• 2022–24 cumulative net income is expected at ~€460mln, ~10% above plan; cumulative dividends are expected at ~€290mln, 45% above plan.

• Italian conditions expected to include slower growth without recession, continued disinflation, gradually rising funding costs, cautious corporate capex and selective lending.