Core businesses continue strong growth
The Banca IFIS (MI:IF) group’s strategy to replace bond profits with flows from sustainable business operations continues to be delivered, broadly speaking. Strong growth in the core trade receivables business and in the distressed loans operation meant the group net profit from financial activities fell just €2m to €57m (Q315 vs Q314) despite a €13m reduction in bond portfolio contribution. The bond portfolio contributed less than 10% of group’s net profit from financial activities (Q314 33%). Costs were well controlled.
Q315 results
Credit was a noticeable highlight in Q315. Impairments were €1.4m better than our forecast, continuing the recent excellent trend. The core trade business reported impairments of just €1.3m in the quarter on its €2.7bn loan book. As expected, the DRL unit reported net recoveries. Costs were slightly better than expected, rising 16% with investment. Q315 net interest income (€47.9m against our forecast €52.5m) missed our estimate primarily due to a €5m lower than expected NII in the bond portfolio. Critically, this was offset with an equity gain of €14.5m in revaluation reserves which we had previously not forecast – both the lower NII and capital gain driven by lower market interest rates. Fee income was a small miss.
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