The Growth in SME Loans and illimity’s Profits Continues in the Third Quarter of 2021

Operating Profit of 77.5 Million Euro for 9M21 (+176% Over 9M20)

Net Profit of 46.2 Million Euro for 9M21 (+90% Over 9M20)

Net Profit of 18.8 Million Euro in the Third Quarter of 2021
(+26% Compared to 2Q21 and +98% Compared to 3Q20)

Solid and Well-Diversified Revenues, Costs Under Control
Also Including Investments in New Initiatives
Excellent Quality of Existing Business

ROE Climbs to 9% in the Nine Months 2021

Short and Medium-Long Term Targets Confirmed

Resolved to Convene the Shareholder’s Meeting to be Held on December 15, 2021 for Integration of the Board, Remuneration Policy and New Long-Term Incentive Plan

• Growth Credit Division: the driver behind the rise in the Group’s volumes in the quarter, with net customer loans up by 16% over the previous quarter (+70% y/y) to 1.17 billion euro and further revenue diversification, with a positive contribution coming from the initiatives launched at the beginning of the year (capital markets, Ecobonus¹)
• Distressed Credit Division: confirms itself as the force behind the Group’s profitability, thanks also to the dynamic management of its existing portfolio, generating revenues in the first nine months of 2021 exceeding those earned in the whole of 2020. The Division’s Cost income ratio remained at excellent levels at 32%
• Direct Banking Division: direct retail customer funding rising to ca. 1.3 billion euro and significant advances on the new initiative front. HYPE released its new offer in September and asserted the market leadership with around 1.5 million customers. B-ILTY – the first fully digital direct bank designed for small corporates – confirmed the launch by the first quarter of 2022
• Liquidity of 1.1 billion euro and a robust capital base with a CET1 Ratio of 20.1% (20.6% pro-forma²) and a Total Capital Ratio of 26.5%
• The capital increase reserved to the ION Group completed in the third quarter and the licence agreement for illimity’s IT architecture gets under way.

MILAN, Italy, Nov. 11, 2021 (GLOBE NEWSWIRE) — via InvestorWire — Chaired by Rosalba Casiraghi, the Board of Directors of illimity Bank S.p.A. (“illimity” or “Bank”) yesterday approved the illimity Group’s results at 30 September 2021.

illimity again reports solid financial and operating performance in the third quarter of 2021: net profit of 18.8 million euro (14.9 million euro in the second quarter of 2021, +26% q/q, and 9.5 million euro in the third quarter of 2020, +98% y/y), taking the net result for the first nine months of the year to 46.2 million euro, up by 90% over the corresponding period in 2020. ROE³ closed at over 9% for the first nine months of 2021 on an annualised basis.

All the new strategic initiatives are running to schedule and the trajectory towards the short and medium-long term targets set in the 2021-25 Strategic Plan presented on 22 June is therefore confirmed.

Specifically:

• Revenues in the third quarter rose by 49% over the third quarter of 2020, driven by the Group’s recurring activities and the development of its new initiatives. The strong performance accompanied the gradual balancing of the revenue mix, with the component of income other than net interest income representing around 50% of the total in the first nine months of 2021.
• Standing out among revenues is the rise in fees and commissions, which in the third quarter rose by 18% q/q to reach 10.3 million euro – three times the corresponding figure for the previous year – driven by the robust generation of new business volumes in the Growth Credit segment, including Factoring, the solid results of neprix and the rising contribution of the new initiatives.
• Revenues for the period include the first income of 5 million euro arising from the licence agreement entered into with the ION Group for the use of the information systems developed by illimity (part of the 90 million euro planned to be received over five years).
• The Distressed Credit Division’s performance in managing purchased loans proved once again to be excellent in this quarter, with an extremely good progression in gross cash flows, generating ca. 5.3 million euro of profit from closed positions and other income of ca. 7.2 million euro; overall, the Division produced revenues of 146.1 million euro in the first nine months of 2021.
• Despite the fact that the Bank continued to invest in new initiatives which have yet to produce revenues, operating costs in the third quarter fell by around 9% over the previous quarter due to seasonal savings on certain staff cost items. This trend, together with the robust performance of revenues, led to a further improvement in the Cost income ratio, which reached 56% in the quarter and 60% in the first nine months of 2021, a clear-cut improvement over the same period of the previous year (76% in 9M20).
• As a result of the above dynamics, illimity’s operating profit rose to 77.5 million euro in the first nine months of 2021, nearly three times the figure of 28.0 million euro reported for the same period in 2020.
• The Bank’s risk profile strengthened further, remaining at the top levels of the system: the CET1 Ratio rose to 20.1% at the end of September 2021 (20.6% pro-forma with the inclusion of the special shares) due to the completion of the capital increase reserved to the ION Group and the profit of the quarter just ended; the ratio between gross doubtful organic loans and total gross organic loans fell to 2.5%; excluding the loan portfolio of the former Banca Interprovinciale, this ratio stands at around 0.5%. Liquidity continued to be abundant at over 1.1 billion euro at the end of September 2021, consistent with the expectation of an acceleration in opportunities in the distressed credit market in the final part of the year.
• Lastly, the Bank continued developing the new initiatives outlined in the Strategic Plan in line with the timetable. In September, HYPE launched new services and products on the market, enhancing its offer, with the aim of giving a further thrust to the already robust growth performance of the company, which can currently count on 1.5 million customers, confirming its leadership position among the fintechs that operate in Italy. The development of B-ILTY, the new highly digital direct bank designed for small corporates, ready for launching in the first quarter of 2022, is running to schedule. And in conclusion, the operating activities continued for enabling neprix Sales – the remarketing entity already a leader among platforms for the sale of real estate and capital goods arising from legal procedures – to enter the real estate free market by way of an innovative and digital offer model.

Corrado Passera, CEO and Founder of illimity, commented: “The world served by illimity, that of the small corporates, offers significant opportunities. A growing number of corporates present ambitious projects to enhance their potential and many are on solid paths towards a turnaround. The increase in distressed corporate credit will also accelerate once the banking moratorium ends, and the role of banks such as illimity specialising in this market segment will prove itself fundamental.

The decisions and technology investments we have made in these years will enable us to provide a service model that has shown itself to be competitive in terms of both expertise and efficiency. B-ILTY, the direct bank for small corporates, which will be launched on the market in the first part of the year 2022, will complete the construction of the illimity model and be completely unique, and not only at an Italian level.

The results of the first nine months of 2021 and in particular the third quarter confirm that the path that illimity has taken, has only just begun to bear its fruits for our customers and our shareholders.”

For more details view the entire announcement:
https://assets.ctfassets.net/0ei02du1nnrl/2DFTbB9Vt2QYCNcNT7pm5U/bec4c82968049162bac44bf70d39ea0e/illimity_3Q21_9M21_Results.pdf

For further information:

Investor Relations
Silvia Benzi: +39.349.7846537 – +44.7741.464948 – [email protected]

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Los Angeles, California
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¹ Purchase of tax credits deriving from energy efficiency interventions, reduction of seismic risk and recovery of the building heritage provided for by the Relaunch Decree (so-called 110% Superbonus and other building bonuses).

² Including special shares for 14.4 million euro

³ ROE – Return On Equity: calculated as the ratio between annualised net profit for the period and average equity for the nine months (1/1-30/9/2021).