Credito Emiliano (CE) H1 2024 earnings summary

Executive summary

• Net profit for 1H24 reached €323.8 million, up 8.4% year-over-year, with annualized ROE at 17.4% and ROTE at 20.0%, after €33 million in contributions to distressed banks and €4 million in insurance guarantee provisions.

• CET1 ratio at 17.1% (Group) and 15.7% (Credemholding), providing an 812 basis point buffer over regulatory requirements.

• Asset quality among the best in Italy, with gross NPL ratio at 1.87% and net NPL ratio at 0.78%, and cost of risk at 5 bps.

• Business volumes, loans, and customer base grew year-over-year, with over 92,000 new customers and customer funding at €101.2 billion (+8% YoY).

• Diversified revenue streams, digital transformation, and ESG initiatives, including Net Zero Banking Alliance membership and certifications for gender equality and pay parity, supported sustainable growth.

Financial highlights

• Operating income reached €1,029.7 million (+8.7% YoY), with net interest income at €570.2 million (+13.1% YoY) and non-interest margin at €459.4 million (+3.6% YoY).

• Net operating profit rose 10.2% to €532.1 million, despite higher operating costs from labor contracts and IT investments.

• Cost/income ratio improved to 43.2%; profit before taxes was €480.5 million (+9.1% YoY).

• Group total funding reached €117.0 billion (+8.9% YoY); direct deposits from customers at €38.3 billion (+4% YoY); indirect customer deposits at €54.1 billion (+10.9% YoY).

• LCR at 188%, NSFR at 135%, and loan-to-deposit ratio at 0.91.

Outlook and guidance

• Management expects continued organic growth, focusing on operational efficiency, digitalization, AI, and ESG integration.

• NII guidance for 2024 revised towards flat (0% to -5%), with non-interest income to be a key driver as rates decline.

• Loan growth expected to remain positive, leveraging diversified channels and specialized networks.

• Wealth management and fee revenue growth are strategic priorities.

• Cost of credit is expected to remain low, with solid capital and risk profiles maintained.