Banca Sistema (BST) H1 2024 earnings summary

Executive summary

• Operating profits before systemic charges improved in H1 2024, driven by positive commercial dynamics and asset repricing, with total income rising 10.8% to €54.8 million.

• Factoring, pawn loans, and CQ loans all showed strong year-on-year turnover growth, with factoring up 13%, pawn loans up 10%, and CQ turnover up 42%.

• Adjusted net profit grew 11% year-on-year to €9.4 million, while stated net profit declined 20% due to higher tax rate and systemic charges.

• The 2024-2026 Strategic Plan focuses on strengthening the multi-specialist model, expanding factoring, retail, and collateralised lending.

• Cost of funding stabilized at 3.6% in Q2, flat quarter-on-quarter but up 120 bps year-on-year.

Financial highlights

• Adjusted pre-tax profit reached EUR 15.7 million, up 19% year-on-year; adjusted net profit was EUR 9.4 million, up 11% year-on-year.

• Net interest income fell 41.3% to €21.0 million, mainly due to higher funding costs; adjusted net interest income declined 9.4% year-on-year.

• Total operating costs rose 15.3% year-on-year to €40.3 million, mainly due to earlier DGS provision.

• Total assets grew to €4.74 billion, with CET1 ratio at 12.4% and Total capital ratio at 15.5%.

• Cost of risk increased to 24 bps from 19 bps in H1 2023.

Outlook and guidance

• Expectation of further improvement in adjusted net interest income and total income in coming quarters, supported by trading Superbonus and asset repricing.

• Cost of funding anticipated to remain stable at 3.6% for 2024, with potential decrease in 2025.

• CQ division's negative contribution expected to peak in 2024, with improvement and possible return to positive total income in 2025.

• No further Deposit Guarantee Scheme charges expected after H1 2024.

• Kruso Kapital is set to complete a Portuguese acquisition by year-end.