Operating Profit of 110.6 Million Euro (+147%) – Illimity Bank

Chaired by Rosalba Casiraghi, the Board of Directors of illimity Bank S.p.A. (“illimity” or the “Bank”) yesterday approved the illimity Group’s results at 31 December 2021.

illimity fully achieved its 2021 profit guidance, posting a net profit of 65.6 million euro for 2021, more than double the figure for 2020 (31.1 million euro). ROE for 2021 amounted to ca. 10%. Net profit for the fourth quarter of 2021 rose to 19.4 million euro (from 18.8 million euro in the third quarter of 2021, +3% q/q and +187% over net profit of 6.8 million euro for the fourth quarter of 2020).

In detail, the year was characterised by:

• More than doubled operating profit of 110.6 million euro for 2021 (+147% compared to operating profit of 44.8 million euro for 2020).
• Significant business growth, with loan and investment volumes of more than 1.1 billion euro originated in 2021, representing a rise of 24% on an annual basis. Volume growth was above all driven by the Growth Credit Division, which saw an acceleration in lending and investing activity in all its business lines, while the Distressed Credit Division maintained its positioning as leading operator on the Italian market thanks to its ability to identify new investment opportunities in profitable and highly specialist market segments. In the fourth quarter alone the Bank originated volumes of 511 million euro (+120% q/q).
• A sharp increase in operating income to reach 271.2 million euro (+56% y/y) in 2021, increasingly diversified and balanced between the net interest income and other income components. Operating income reached 77.8 million euro in the fourth quarter, representing a sustained rise on both a quarterly (+17%) and annual (+34%) basis. The Distressed Credit Division confirms to be the largest contributor to revenues, generating 73% of the total revenues earned in the year.
• A visible improvement in operating leverage: the Cost income ratio fell considerably during the year to 59% compared to 74% in 2020. The Cost income ratio for the fourth quarter amounted to 62% (-11 percentage points over the fourth quarter of 2020).
• Organic credit quality remained at excellent levels: the ratio between gross doubtful organic loans and total gross organic loans originated since the start of illimity’s operations stood at 0.7% at 31 December 2021 – a figure amounting to 2.3% if the loan portfolio of the former Banca Interprovinciale is included; organic cost of risk² stood at 4 bps for the full year 2021.
• A robust capital base with indicators positioned at the top levels of the system – a CET Ratio of 18.8% (19.3% pro-forma with the inclusion of the special shares) – and a sound liquidity position (of approximately 0.7 billion euro) despite the significant deployment in new loans and investments in the quarter.

Moreover, 2021 saw the foundations laid for solid growth in profits and profitability also in 2022, in line with the guidelines for growth included in the Strategic Plan:

• we entered a partnership agreement with the ION Group. Initially centred on the licence agreement for the use of our IT platform, we are now working to extend this to other key sectors;
• we have made additional progress on our sustainable growth path, developing our ESG values further in relations both with our customers and our staff; we have joined the United Nations Global Compact, the biggest business sustainability initiative;
• we have invested in all our activities and strengthened our presence in the key markets, amongst which we note the following:
  • illimity SGR, which has successfully completed further closings of its first Turnaround fund;
  • the capital markets activity focused on SMEs, which has already provided a visible contribution to our results;
  • the Energy desk of the Distressed Credit Division, which has consolidated its presence on the market, taking the first investment-divestment cycle to completion and achieving significant economic results;
  • entry into the public procurement claims segment, a large field with limited competition and high returns;
  • the strengthening of our product offering and the technology platform of HYPE, Italy’s leading fintech;
• we have laid the foundations for the launch of two completely new initiatives, based on technology, that will take our future profitability well above the average for the sector. In 2022 illimity will become even more “tech”:
  • b-ilty, the first digital business store for credit and financial services developed by illimity to help SMEs to grow. b-ilty is a fully digital banking platform, conceived on the basis of the suggestions received from hundreds of small corporates and inspired by examples typical of the most globally widespread digital solutions;
  • thanks to our digital and real estate expertise, over the next few weeks we will also be launching the most innovative proptech company in Italy. An evolution of the strategy of our servicing unit which, as remarketing leader on the judicial real estate market, will enter the open real estate market, currently characterised by its large scale and significant need for innovation, with a new brand and an innovative platform.

Corrado Passera, CEO and Founder of illimity, commented: “We ended 2021 with considerable satisfaction and are starting 2022 with a great deal of confidence.

“A new phase of further growth is beginning in 2022. The performing, restructuring and distressed credit markets on which we have been concentrating since we were first established are even bigger than we initially envisaged and we have shown that we have strong and sustainable competitive advantages. Our growth will be further supported by three highly technological initiatives that are already operative today: b-ilty (the first complete digital platform for credit and financial services for SMEs), our proptech NewCo (a highly innovative proptech that will begin operations over the next few weeks) and HYPE (Italy’s leading fintech). These initiatives all have in common the fact that they serve large markets and meet unsatisfied needs, that they have a highly scalable operating model and that they can open up to partnerships with key players.

Lastly, the synergies we will gradually unleash with the ION Group in all our business areas will bring further acceleration to illimity’s growth path.

Our results and the work we have carried out to date enable us to be confident that the growth and profitability objectives included in the 2021-25 Strategic Plan (net profit of >240 million euro) are fully within our reach.”

For more details view the entire announcement:
https://assets.ctfassets.net/0ei02du1nnrl/6oTUyP7z2SEFn2N32YkE0v/820cb3f91ba51badc6012ea738b13574/illimity_4Q21_FY21_Results.pdf