Trade receivables

This segment includes the following business areas:

  • Crediti Commerciali Italia and Crediti Commerciali International, dedicated to supporting the trade receivables of SMEs operating in the domestic market as well as companies growing abroad or based abroad and working with Italian customers; this area includes the operations carried out in Poland by the investee IFIS Finance’s Sp. Z o.o.;
  • Banca IFIS Pharma, supporting the trade receivables of local health services’ suppliers and pharmacists.

INCOME STATEMENT DATA

(in thousands of Euro)
 
31.12.2017 31.12.2016 RESTATED (1) CHANGE
ABSOLUTE%
Net interest income 75.721 92.773 (17.052) (18,4)%
Net commission income 55.094 55.740 (646) (1,2)%
Net banking income 130.815 148.513 (17.698) (11,9)%
Net impairment losses on receivables (33.641) (20.305) (13.336) 65,7%
Net profit (loss) from financial activities 97.174 128.208 (31.034) (24,2)%

 

(1) To facilitate the comparison between the results of the reference periods, the funding cost included in the net interest income for 2016 was recalculated according to the new 2017 funding approach.

QUARTERLY INCOME STATEMENT DATA
(in thousands of Euro)
4th Q. 20174th Q. 2016 RESTATED (1)CHANGE 
   ABSOLUTE%
Net interest income 18.491 33.121 (14.630) (44,2)%
Net commission income 14.731 13.693 1.038 7,6%
Net banking income 33.222 46.814 (13.592) (29,0)%
Net impairment losses on receivables (19.465) (5.082) (14.383) 283,1%
Net profit (loss) from financial activities 13.757 41.732 (27.975) (67,0)%

(1) To facilitate the comparison between the results of the reference periods, the funding cost included in the net interest income for 2016 was recalculated according to the new 2017 funding approach.

The net banking income of the Trade Receivables segment amounted to 130,8 million Euro, down 11,9% compared to 148,5 million Euro at 31 December 2016. The amount from the previous year included the 15,8 million Euro positive impact of the review of cash flows from receivables purchased outright (ATD, Acquisto a Titolo Definitivo in Italian) due from Italy's National Health Service. This review was conducted in the fourth quarter of 2016, therefore it affects also the quarterly analysis. Excluding this component, net banking income declined by 1,4% on an annual basis and by 7% quarter-on-quarter;

In terms of volumes, the segment generated 11,7 billion Euro in turnover, up 11% from 31 December 2016, with 5.447 active corporate customers, up 2% compared to the prior year. The continued rise in average volumes did not cause a proportional increase in profitability because the average terms offered to customers declined from 2016 as a result of the current economic scenario, with persistently low market rates and strong competitive pressures. Despite this external impact, the overall profitability of loans remained decent thanks to the focus on small customers with high marginal profitability and showed signs of recovery in the fourth quarter of 2017.

Net impairment losses on receivables amounted to 33,6 million Euro (20,3 million Euro in the prior-year period, +65,7%); the increase in impairment losses reported by the Trade Receivables segment in the fourth quarter referred to an individually significant position classified as unlikely to pay.

Therefore, the cost of credit amounted to 115 bps, compared to 79 bps at 31 December 2016; excluding the mentioned impairment loss, it would have amounted to 70 bps.

STATEMENT OF FINANCIAL POSITION
(in thousands of Euro)
31.12.201731.12.2016 RESTATEDCHANGE 
   ABSOLUTE%
Net bad loans 31.368 31.692 (324) (1,0)%
Net unlikely to pay 82.361 50.900 31.461 61,8%
Net past due exposures 105.337 118.420 (13.083) (11,0)%
Total net non-performing exposures to customers 219.066 201.012 18.054 9,0%
Net performing loans 2.820.710 2.891.476 (70.766) (2,4)%
Total on-balance-sheet loans to customers 3.039.776 3.092.488 (52.712) (1,7)%

Loans to customers included in this segment are composed as follows: 23,6% are receivables due from the Public Administration (compared to 28,3% at 31 December 2016) and 76,4% due from the private sector (compared to 71,7% at 31 December 2016).

Net non-performing exposures in the Trade Receivables segment increased by 9,0% from 201,0 million Euro at the end of 2016 to 219,1 million Euro, largely because of the rise in unlikely to pay.

The segment's net bad-loan ratio was 1,0%, in line with December 2016 (1,0%), while the ratio of net unlikely to pay to loans rose to 2,7% from 1,6% at 31 December 2016, mainly because of the impairment loss recognised on an individually significant position. The segment's ratio of total net non-performing exposures to loans rose from 6,5% at the end of 2016 to 7,2% at 31 December 2017. Net non-performing exposures amounted to 16,0% as a percentage of Group equity, compared to 16,4% in the prior year. The overall coverage ratio of non-performing exposures rose from 57,7% at the end of 2016 to 58,4% at 31 December 2017.

TRADE RECEIVABLES
(in thousands of Euro)
BAD LOANS(1)  UNLIKELY TO PAY PAST DUELOANS TOTAL NON-PERFORMING PERFORMING
BALANCE AT 31.12.2017          
Nominal amount of non-performing exposures 288.295 129.402 109.463 527.160 2.833.578
As a proportion of total gross receivables 8,6% 3,9% 3,3% 15,7% 84,3%
Impairment losses/reversals 256.927 47.041 4.126 308.094 12.868
As a proportion of gross value 89,1% 36,4% 3,8% 58,4% 0,5%
Carrying amount 31.368 82.361 105.337 219.066 2.820.710
As a proportion of net total receivables 1,0% 2,7% 3,5% 7,2% 92,8%
BALANCE AT 31.12.2016          
Nominal amount of non-performing exposures 276.741 76.551 122.451 475.743 2.900.917
As a proportion of total gross receivables 8,2% 2,3% 3,6% 14,1% 85,9%
Impairment losses/reversals 245.049 25.651 4.031 274.731 9.441
As a proportion of the nominal amount 88,5% 33,5% 3,3% 57,7% 0,3%
Carrying amount 31.692 50.900 118.420 201.012 2.891.476
As a proportion of net total receivables 1,0% 1,6% 3,8% 6,5% 93,5%

(1) Bad loans are recognised in the financial statements up to the point in which all credit collection procedures have been exhausted.

Net bad loans amounted to 31,4 million Euro, -1,0% from the end of 2016; the coverage ratio was 89,1%, slightly up from 31 December 2016. Unlikely to pay were up 61,8% to 82,4 million Euro, and the coverage ratio rose by approximately 8,7%. As already mentioned, this was mainly because of the impairment loss recognised on an individually significant position.

Net non-performing past due exposures totalled 105,3 million Euro, compared with 118,4 million Euro in December 2016 (-11,0%).

KPIs31.12.2017 31.12.2016 RESTATEDCHANGE 
   ABSOLUTE %
Turnover 11.715.442  10.549.881 1.165.561  11,0%
Net banking income/ Turnover 1,1% 1,7%  (0,6)% -
Cost of credit quality 1,15% 0,79% 0,36% -
Net bad loans/Loans to customers 1,0% 1,0% 0,0% -
Coverage ratio on gross bad loans 89,1% 88,5% 0,6% -
Non-performing exposures/Loans to customers 7,2% 6,5% 0,7% -
Total segment RWAs 2.554.528 2.348.131 206.397 8,8%
 

The following table shows the nominal amount of receivables acquired (operating data not recognised in the statements) as part of factoring transactions outstanding at the end of the period (Total Receivables), broken down into receivables with or without recourse and receivables purchased outright. Please note that the breakdown of purchased receivables in the following table is based on the contract form used by the Group.

TOTAL RECEIVABLES
(in thousands of Euro) 
31.12.2017 31.12.2016 RESTATED CHANGE 
ABSOLUTE%
With recourse 2.180.830 2.150.929 29.901 1,4%
of which due from the Public Administration 304.757 332.735 (27.978) (8,4)%
Without recourse 405.288 464.957 (59.669) (12,8)%
of which due from the Public Administration 4.531 8.949 (4.418) (49,4)%
Outright purchases 1.182.759 1.264.950 (82.191) (6,5)%
of which due from the Public Administration 557.906 812.384 (254.478) (31,3)%
Total receivables 3.768.877 3.880.836 (111.959) (2,9)%
of which due from the Public Administration 867.194 1.154.068 (286.874) (24,9)%

 

Factsheet
2017

Price 31/12/2017 €40.77

Yield 2.45%

Market Cap €2.2bn

Dividend €1/share

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KEY HIGHLIGHTS

Milan IF.MI

Fitch, BB+ outlook stable

Price
to 31/12/2017
€40.77

Yield
to 31/12/2017
2.45%

Market Cap
to 31/12/2017
€2.2bn

Dividend
 
€1/share

BACKGROUND

  • Banca IFIS (IF.MI) is a specialty finance player, specialized in financing SME’s with a complete range of financial tools, from short-term to medium/longer term finance and structured finance.
  • Banca IFIS is also a leader in the Italian NPL market and present in the tax receivables sector.
  • The Group has a strong and diversified business model that enables outstanding results in terms of profitability and credit quality.
  • There are three key pillars for management decision-making: profitability, liquidity and solidity.
  • Founded in 1983 by Sebastien Egon Furstenberg, the current chairman, Banca IFIS has been listed on the Milan Stock Exchange (Star segment) since 2003, with a market cap of over €2 bln at the end of 2016.
  • The Bank acquired the Interbanca Group in 2016, Cap.Ital.Fin S.p.A. at the start of 2018 and announced the acquisition of Credifarma S.p.A.
  • On the funding side, the bank successfully launched rendimax, an online savings account in 2008 and completed in 2017 the issuance of a €400 mln Tier 2 bond as well as announcing a €5 bln EMTN programme.

Share evolution

NBI contribution by segment

Total Loans
Eu Mn

NPL managed and purchased
(gross BV) - Eu Bn

Share evolution
NBI contribution by segment
Total Loans<br />Eu Mn
NPL managed and purchased<br />(gross BV) - Eu Bn

FUTURE OPPORTUNITIES FOR GROWTH

  • Banca IFIS is well placed to continue to capitalize on the restructuring of bank balance sheets in Italy and the rest of Europe through acquisitions of NPL portfolios.
  • Continued organic focus on SME trade finance (micro, small and medium sized enterprises) that is less competitive and traditional banks find difficult to service.
  • Leveraging the acquisition of the former Interbanca Group, finalized in late November of 2016.
  • Completes full range of services for SMEs.
  • Acquisition brings valuable skills, size and capital to the Group.
  • Development in financing the different production chains in Italy.
  • ONGOING: in 2018 focus on the acquisitions of Credifarma (financing Italian pharmacies) and Cap.Ital.Fin S.p.A. (salary-backed loans).

Four years of consistent
and solid growth

Shareholders

Four years of consistent<br />and solid growth
Shareholders

The chart shows the Shareholders of Banca IFIS that directly or indirectly hold financial instruments representing the capital with voting rights of Banca IFIS over 3%, or over 2% for Shareholders who are also Directors of the Bank.

Notes to the Consolidated Financial Statements
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