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- Growing business activity: customers loans at €2,557 m, +10% vs. 1H2016
- Reported net income of €51 m, up +79% vs. 1H2016
- Adjusted net income of €38 m, up +5% vs. 1H2016
- ROTE adjusted at 30%
- Confirmed high capital ratios: CET1 ratio at 13,7% and Total Capital Ratio at 19.0%
- Good asset quality: net NPLs/net loans at 0.6% and cost of risk annualised of 15 bps
- Dividend capacity of €0.22 per share, +35% vs. 1H2016
The Board of Directors of BFF Banking Group (BFF), the leader in management and non-recourse factoring of receivables towards the Public
Administrations in Europe, has approved today its 1H2017 consolidated financial statements.
The first half of 2017 confirmed the high Group profitability, with a consolidated reported net profit of €51 m, +79% compared to 1H2016, thanks to the sound growth of customers loans, the efficient cost structure and the low risk profile.
“BFF has achieved double-digit growth in volumes of acquired credits and in the stock of customer loans, and has maintained its high profitability, growth and dividend capacity with a strong contribution from Italy and the Magellan business.” – commented Massimiliano Belingheri, CEO of BFF Banking Group.
Key consolidated financial statements items
The 1H2017 reported results reflect the full consolidation of Magellan within the Group. 1H2016 reported results include Magellan’s contribution for only June, due to the closing of the acquisition process (31 May 2016). In this document, year-on-year comparisons are made on the basis of 1H2016 data pro-forma including Magellan for 6 months, in order to show more meaningful comparisons between the performance of 1H2017 and 1H2016.
Customers loans as of 30 June 2017 reached €2,557 m, compared to €2,319 m as of 30 June 2016, with a 10% growth year-on-year. Italy remains the main market for the Group with €1,864 m customers loans. Magellan’s customers loans reached €506 m, 29% higher than €392 m as of 30 June 2016.
Adjusted net interest income in 1H2017 was €81 m, with an 11% increase compared to €73 m achieved in 1H2016.
Adjusted net banking income in the first half of 2017 amounts to €84 m, up 10% compared to €77 m in the first half of 2016.
During 1H2017 BFF has recovered €57 m of late payment interests (“LPI”), compared to €24 m during 1H2016, with a lower recovery rate than in 2016. The stock of unrecognised LPI at 30 June 2017 was €346 m, representing a 6% growth compared to the stock at 30 June 2016 calculated based on the same 45% expected recovery rates.
In the first half of 2017, the Group has continued its funding diversification, with a total funding at €3,136 m at the end of the semester, with an 11% growth compared to the first half of 2016 and in line with the end of 2016. Online deposits reached €850 m at 30 June 2017 (+39% compared to €610 m of the same period of 2016). A new €200 m 2.0% coupon 5 year senior bond was issued to institutional investors on 29 June 2017, following the reimbursement on 12 June 2017 of the €300 m senior bond 2.75% coupon 3 year issued in June 2014.
The average cost of funding registered a reduction compared to the first half of 2016, from 2.09% to 2.04% despite the inclusion in the 1H2017 figures of the additional interests expenses on the Tier 2 bonds and on the debt for the acquisition of Magellan for €3.3m not included in the 1H2016.
The efficiency of BFF Group operations is confirmed, with an adjusted cost/income ratio, excluding extraordinary costs, of 37%, compared to 33% in 1H2016, and flat operating costs quarter-on-quarter.
Reported net income of the first half of 2017 amounts to €51 m, with a 79% increase compared to the €28 m achieved in 1H2016. Adjusted net income amounts to €38 m, excluding non-recurring net profit of €13 m after tax. Adjusted net income registered a 5% growth compared to €36 m in adjusted net income for 1H2016.
In 1H2017 Magellan has reported a €6 m net income adjusted for extraordinary costs, representing 15% of the adjusted net income for the Group.
ROTE adjusted has reached 30% in the first half of 2017 compared to 31% of the same period of 2016.
BFF maintains healthy capital ratios, with a 13.7% CET1 ratio and a 19.0% Total Capital ratio on the Banking Group perimeter.
The Group confirms its superior asset quality, with a net non-performing loans/net loans ratio at 0.6% as of June 2017, compared to 0.1% as of 30 June 2016 and 0.5% as of 31 December 2016. The value as of 30 June 2017 net of the purchases of non performing credits decreases to 0,4%. The 1H2017 cost of risk annualised amounted to 15 bps.
BFF dividend capacity for 1H2017 improves to €0.22 per share vs. €0.17 per share in 1H2016, with a 35% increase.
IFRS 9 accounting principle
IFRS 9 includes requirements for the classification, measurement and impairment of Financial Instruments. It will come into effect on the 1 January 2018. In anticipation of its implementation, BFF has initiated a project in order to manage the impacts of the new standard.
The project, which includes each legal entity of the Group, is divided into two parts – 1. Classification & Measurement and 2. Impairment – which are then sub-divided into three stages: Assessment, Design and Implementation.
The Assessment stage consists of estimating the implementation effects of the new standard, both at individual and aggregate levels, in order to assess the size of the impact and identify the actions needed to be taken to better manage the new accounting principle. At this stage, no significant deviations have been identified in terms of economic impacts and IT applications between the new model based on the “expected losses” and the current model used based on the “incurred losses”.
The Design phase, which is still in progress, is intended to support each Group entity in the identification and formalisation of the requisites that, in the subsequent phase of Implementation, will lead to the formalisation of the new accounting policies and organisational procedures and the creation of the new IT applications.
With reference to the Classification & Measurement workstream, the SPPI Test phase, in which the various types of contracts for each entity of the Group are identified and analysed, has been completed. The SPPI Test has not identified any financial assets or liabilities that must be assessed as fair value.
Significant events since the end of first half of 2017
On 6 July 2017 BFF Banking Group announced that the €100 m and €200 m bonds, already listed on the Main Securities Market managed by the Irish Stock Exchange, were admitted to trading on ExtraMOT Pro market, organized and managed by Borsa Italiana S.p.A.
Statement of the Manager responsible for preparing the company’s financial reports
The manager responsible for preparing the company’s financial reports, Carlo Zanni, declares, pursuant to paragraph 2 of Article 154 bis of the Consolidated Law on Finance, that the accounting information contained in this press release corresponds to the document results, books and accounting records of the Company.
The Half-yearly Report as at 30 June 2017 will be available to the public, under the law, at the corporate head offices, and will also be published on the website www.bffgroup.com, as well as on the website of the authorized central storage mechanism www.1info.it.