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 March 2021.  

illimity reported robust results in the quarter ended 31 March 2021, continuing the positive  performance achieved in 2020 and posting a net profit of 12.6 million euro, its best quarterly  result ever and a figure almost three times higher than that achieved in the first quarter of 2020 (4.5  million euro) and about twice the amount reported in the previous quarter (6.8 million euro). 

Assets stood at over 4.3 billion euro at 31 March, a 5% increase over the previous quarter and  41% up on the figure of 3 billion euro posted at 31 March 2020. The total includes net customer loans and investments of 2.2 billion euro at 31 March 2021, a rise of 34% over the balance of  1.7 billion euro at the corresponding date in 2020 and slightly up (by 1%) over the previous quarter,  despite the sale of positions and discounted payoff transactions.  

The rise in volumes in the quarter was driven by the SME Division, whose net customer loans grew  by 6% over the end of December 2020 (+56% compared to 31 March 2020) to reach 869 million  euro at the end of March 2021. The acceleration in the growth of the business, which began in the  second half of 2020, also continued decisively in the first quarter of 2021, with a positive contribution.

arriving from all business sectors – Factoring, Crossover and Acquisition Finance and Turnaround  – and benefiting from the strong demand for the state-backed loans introduced by government  decrees issued as part of the pandemic crisis. The SME Division also posted profits of  approximately 3 million euro in the quarter earned on credit revaluation events deriving from 

Turnaround transactions. In the quarter the Division posted a pre-tax profit of 4.7 million euro. 

The quality of illimity’s asset portfolio remains solid, with no significant impairment occurring  in the SME Division’s net customer loans. Total gross organic non-performing loans at 31 March  2021 accordingly fell to 35.9 million euro (from 37.4 million euro at 31 December 2020), almost  all of which arising from the business portfolio of the former Banca Interprovinciale network, while  the ratio of these to total gross organic customer loans decreased to 3.0% at 31 March 2021  compared to 3.2% at the end of December 2020 and 4.2% at the end of March 2020. At the end of  March 2021, loans with moratorium amounted to 49 million euro, down significantly from the  December 2020 figure of 65 million euro (and compared to a peak amount requested during 2020  of 86 million euro). 

The first quarter of the year is usually characterised by a somewhat sluggish dynamic of  transactions on the distressed loan market. As a result of this seasonality, volumes in the DCIS  Division remained more or less unchanged over the quarter ended 31 March 2021, closing at 1.3  billion euro, also due to the effect of sale of positions and discounted payoff transactions. On the  basis of a solid pipeline of potential transactions which can be estimated in around 260 million euro,  also this year a gradual acceleration is expected to be seen in the division’s investment activity over  the next few months. Operating trends remained very strong with gross cash flows exceeding expectations. The Bank continued its dynamic management strategy on existing portfolios in this  quarter too, posting additional profits from disposals and closed positions of 9.5 million euro. 

In the quarter the division posted a pre-tax profit of 31.4 million euro. 

Total assets managed by neprix, the illimity Group’s platform specialising in servicing distressed  corporate loans, stood at 9.0 billion euro at 31 March 2021 in terms of the gross book value  (“GBV”) of the loans serviced and the real estate assets and capital goods held for sale. 

At the end of March 2021, direct customer funding remained stable at approximately 2.4 billion  euro compared to the December 2020 figure and up by 36% year on year. Within this total,  illimitybank.com’s funding reached 1.2 billion euro as at March 2021, up 7% on the previous  quarter (and +42% y/y). Funding through Raisin, pan-European deposit platform, stood at 492  million euro, a 20% advance quarter on quarter (+27% y/y). Corporate customer funding on a  quarterly basis declined to 719 million euro (-17% q/q, +35% y/y). 

It is recalled that in December 2020 illimity made its debut on the bond market with the issue of its  first senior preferred bond worth 300 million euro, with a maturity of three years and a coupon of  3.375%. Overall, illimity's total sources of funding at 31 March 2021 stood at 3.5 billion euro, up  approximately 3% on the December 2020 figure and 47% year on year. 

Also as the result of the above mentioned bond placement, liquidity consisting of cash, the net  interbank position, high-quality liquid assets and other marketable securities – to be used to service  the business growth planned for 2021 - remained at excellent levels and totalled approximately 1  billion euro at 31 March 2021. 

Alongside its solid economic and capital results, illimity carried out two important strategic initiatives  in the first quarter of 2021. On 1 January 2021 the Bank concluded the acquisition of an investment  of 50% in HYPE, a leading player in the Italian market for mobile-based financial services platforms. 

HYPE recorded a significant growth in customer numbers, up 26% year on year to 1.4 million.  Starting this quarter, therefore, illimity is recognising its joint investment in HYPE in its  consolidated financial statements using the equity method, leading to a carrying amount of 85.6  million euro at 31 March 2021. 

During the quarter illimity SGR completed work on the launch of its inaugural fund “illimity Credit  & Corporate Turnaround”, whose first closing was announced on 1 April 2021 at a gross amount of  more than 200 million euro. It is a contribution fund dedicated to investments in Unlikely To Pay  (“UTP”) loans due from SMEs with turnaround prospects. This launch consolidates illimity’s market  positioning in the UTP sector, a segment where the Bank is already playing a leading role through  its investment in single name and portfolios exposures through its DCIS and SME Divisions. 

The increase in assets, together with the effects arising from the consolidation of the investment in  HYPE, led to a rise in risk-weighted assets (RWAs), which at the end of March 2021 stood at  3,018 million euro, up by 6% over the figure of 2,851 million euro at the end of 2020 and by 29%  over the same period in 2020. 

Lastly, CET1 capital rose to approximately 530 million euro at the end of the first quarter of 2021  compared to 509 million euro at the end of December 2020 (439 million euro at March 2020), mostly  as the result of the net profit for the quarter. 

These factors led the continuation of a robust CET1 ratio, which ended March 2021 at 17.6%. On  the basis of unchanged assets, the Bank’s pro-forma CET1 ratio, meaning that including special  shares of 14.4 million euro, stood at 18.0%.  

Corrado Passera, illimity’s CEO, commented: “We are very satisfied about the start of 2021. The  growth of our lending activity, the quality of our portfolios, the scale effect that is now emerging in  various areas of our business and the resulting economic performance all confirm the choices we  have made so far. In recent months, very promising activities have been launched in Open Banking  (HYPE) and asset management (illimity SGR). A number of strategic developments not initially  foreseen are also emerging and will be presented on 22 June with the update of our Strategic  Plan.”.