da Intermonte – BANCA IFIS company research report

Buon pomeriggio,

di seguito e in allegato inviamo il company research report relativo a BANCA IFIS a cura di Intermonte.

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Un caro saluto

Laura Morreale

M. +327 3435530

30% 3Y cumulated yield in the pipeline

Volumes remain steady with Factoring & Leasing turnover/NNM on the upside vs core contracting markets. The Ifis NPL business is progressing both organically and through bolt-on deals (Revalea) that seal partnerships (Mediobanca) that may endure. This runs counter to a market that is actually contracting in general (bank lending) and specifically in Ifis’ core business areas. The NRRP may actually boost 2024 volumes in a scenario with the possibility (in 2H24) of shrinking interest rates. However, we see two possible caveats for 2024: funding costs and cost of risk.
Funding costs: a contraction of margins (fairly stable so far) may technically be triggered in 2024. We have updated our 2024 estimates to incorporate limited margin contraction which must be seen as a tactical move: 2023 projections are technically embedded in estimates (2023 net profit of €160m is within reach if we look at 9M23 data and recent guidance); however, next year may end up being more managed, at least at the beginning; later on, we expect funding costs to soften. There is a pot of €2.4bn liquidity to be rolled over among TLTRO funds and bonds, but Ifis has already moved forward and the roll-over has technically been done.
Cost of risk: 9M23 numbers showed outstanding asset quality, with marginal signs of possible deterioration. Ifis’ best-in-class asset quality has been ballasted by only €15m of LLPs (incl. a €6m one-off on a structured financial position). Worth reminding that Ifis is sitting on €65m of LLPs on performing exposures (so called overlays) that may turn out to be a shield in 2024.
Payout policy at Ifis is what one might call a mantra. In our view, the situation is crystal clear: the Group’s healthy capital position is self-evident and the cash dividend payout must, in our view, be taken for granted. We expect a flow of cash dividends that embeds a 25%, 2y cumulative yield (incl. €1.2/share paid on 22 Nov. as an interim).
Estimates finetuning: we have looked again at our estimates in order to mainly update funding cost, cost of risk and also embed the consolidation of Revale; this should have a mid-single digit impact on 2024 while leaving 2023 and 2025 basically unchanged.
Outperform confirmed, T.P. marginally trimmed to Eu20.3/s: We think the 2023 budget is within easy reach while 2024 may be slightly hit by higher funding costs and cost of risk. That said, the distribution policy (fully in cash) unveiled in 2Q23 delivers a solid dividend yield (some 10% yearly) that should be a solid support for the stock.