Banca Sistema (BST) Q1 2025 earnings summary

Executive summary

• Net profit reached €11.6 million in Q1 2025, up 179–180% year-over-year, driven by strong income growth in factoring, pawnbroking, and late-payment interest accruals tied to ECHR rulings, with adjusted net interest income more than doubling year-on-year due to wider asset spreads and lower funding costs.

• Total income rose 60% year-over-year, or 21% excluding ECHR-related accruals, mainly from factoring, Superbonus trading, and higher government bond yields.

• Operating costs increased 8.7–9% year-over-year due to higher FTEs, administrative expenses, and consolidation of the Portuguese business.

• All divisions showed improved profitability: factoring net profit rose 64%, pawnbroking net profit increased 250%, and the CQ division reduced its loss from €4.2 million to €2.8 million.

• The Group’s total assets decreased by 4% quarter-on-quarter, reflecting lower loan volumes and securities portfolio.

Financial highlights

• Net interest income more than doubled year-over-year to €24.5 million, while net fee and commission income fell 34% to €5.7 million due to non-recurrent large transactions in the prior year.

• Pre-tax profit nearly tripled year-over-year to €19 million, with net income at €11.6 million, despite higher cost of risk at 57bps (vs. 17bps in 1Q24).

• Total income: €42.8 million (+60% y/y); Superbonus trading income was €8.8–9.1 million, up >100% year-over-year.

• Personnel costs increased 6% year-over-year, administrative costs up 16%, overall costs up 9%.

• Retail funding accounted for 75% of total funding, with term deposits up 2% quarter-on-quarter and 80% sourced from abroad.

Outlook and guidance

• Management expects trends of lower funding costs and strong commercial performance to continue in 2025, with adjusted income margin expected to remain robust and stable.

• Factoring outstanding expected to remain flat for the year, with more exposure to central government and less to NHS.

• Cost of funding targeted to average around 3% for 2025, improving from previous estimates.

• CQ division expected to remain loss-making in 2025, despite lower funding costs and ongoing legacy portfolio runoff.

• Risk-management actions and active factoring portfolio management could improve capital ratios despite higher PA past dues.