Banca Sistema (BST) H1 2024 earnings summary

Executive summary

• Operating profits before systemic charges improved in H1 2024, driven by strong commercial dynamics, asset repricing, and double-digit growth in factoring and pawn loans, while CQ loan stock declined despite a sharp increase in new volumes.

• Adjusted net profit rose 11% year-over-year to €9.4 million, while stated net profit declined 20% to €6.0 million due to higher taxes and systemic charges.

• Total income increased 11% year-over-year to €54.8 million, driven by factoring, pawn loans, and higher fee contributions.

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

• 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%.

Financial highlights

• Adjusted net interest income declined 9% year-over-year to €32.5 million, while net fee and commission income increased 58% to €15.9 million, mainly from factoring.

• Total operating costs rose 15% year-over-year to €40.3 million, mainly due to earlier Deposit Guarantee Scheme provisions.

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

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

• Total assets grew to €4.74 billion, up 3.7% since December 2023.

Outlook and guidance

• Factoring turnover and Superbonus Factoring contribution are expected to remain strong in H2 2024.

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

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

• No further Deposit Guarantee Scheme charges expected after H1 2024, positively impacting Q4 results.

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