Banca IFIS SpA unveiled a new business plan for the next three years, under which the Italian lender aims to increase profits to boost its financial solidity and fund growth in its core businesses.
For 2022, Banca IFIS plans to achieve a net profit of €147 million, compared to an estimated €123 million expected for 2019. Net banking income is expected to amount to €602 million in 2022, driven by the acquisition of new nonperforming loans with a nominal amount of €8.5 billion over the period for a total investment of roughly €800 million and an increase in the volumes of loans to customers of €1 billion in the commercial and corporate banking division, based on digital innovation, a new market coverage model and a new marketing strategy.
The bank expects operating costs to increase slightly to €314 million by 2022 from an estimated €312 million in 2019, despite investments in IT, digitalization and marketing. Banca IFIS expects its headcount to total 1,688 employees at the end of 2022, with 67 layoffs and the 190 new hires. It will also invest roughly €60 million over the three-year period to support organic growth and maintain its business stability.
AUM is expected to increase to €9.1 billion by 2022, according to the Jan. 14 statement.
The lender plans to reduce its NPLs to €496 million in 2022 from an estimated €654 million in 2019. The bank is also targeting a return on tangible equity and common equity Tier 1 ratio of 8.9% and 12.0%, respectively, in 2022. The targeted CET1 ratio exceeds the lender's current regulatory requirement of 8.12%
Banca IFIS estimates its payout ratio to be in the range of 40% and 45% over the three-year plan, representing a 7% yield on current exchange prices at the current share price levels.
The bank added that its strategy from 2023 onward, when its NPL purchases have reached a more significant scale, will be to serve as a co-investor for soured debt while remaining a primary player for the asset classes of reference.
No near-term M&A
Discussions between Banca IFIS and rival Credito Fondiario SpA over a potential debt recovery partnership fell through in October 2019 due to disagreements in governance. The talks involve Banca IFIS folding its debt purchase and recovery businesses into a new entity that will be consolidated into Credito Fondiario.
Speaking at an investor and press presentation, new CEO Luciano Colombini has ruled out any M&A deal in the near term after the failed Credito Fondiario deal, saying Banca IFIS would only consider acquiring a smaller peer if it could help the lender branch out into more profitable secured loans. However, Colombini said the bank was more likely to hire a team of staff with relevant skills, Reuters reported.
Another option for Banca IFIS is to open up its bad-loan purchasing and managing operations to minority investors to boost its capital ratios in an event of an emergency, such as an economic downturn, the report noted.