2020: a strong start

May 12, 2020

Corrado Passera's editorial

CEO in illimity

We are very satisfied with the good start of 2020.

illimity reacted immediately to the Covid-19 challenge: our highly flexible and robust architecture has safeguarded our employees and ensured business continuity since February the 24th. No need for additional investments or other measures: we simply switched to full smart working mode. In addition to day to day operations, we have maintained timelines and delivery of all strategic projects and initiatives.

illimity’s digital DNA not only helped us tackle the immediate effects of the COVID-19 crisis, but it is proving to be a competitive advantage in scouting new projects and opportunities across all our divisions. Our innate digital foundation is going to be an important enabler in the “new normal” that is gradually stabilising.

In the first quarter of 2020, illimity reported very solid economic results with a satisfactory quarterly growth in revenue. Despite adopting an intentionally prudent approach regarding loan adjustments, we closed the quarter with a pre-tax profit of €7.2mln (almost five times the Q4 amount). illimity has a robust capital base, with a CET1 ratio of approximately 19% as of the end of March (around 20% on a like-for-like basis). illimity is also enjoying ample liquidity amounting to €750mln and this is further reinforced by the fact that a large portion of deposits are term deposits.

In this first quarter the bank pursued a dynamic strategy in the management of its distressed credit portfolio. We adopted a more stringent and selective approach to volume growth, consistent with the uncertainty that prevails in the current scenario and placing illimity in a better position to seize emerging opportunities.

For the next future, we expect the size and the competitive dynamics of the markets in which our bank operates to become even more attractive.
Just a couple of examples:
- The UTP portfolio market is just starting and it is set to become much bigger. Our ability to combine the expertise of the SME Division and the Distressed Credit Division represents a significant competitive weapon. Being a full-fledged bank provides a further advantage vs funds that are not in the position to support going concerns.
- The lockdown imposed by Covid-19 is increasing the demand for digital banking services, beyond our expectations. illimitybank.com will confidently ride this trend both directly and through partnerships.
- Another advantage not yet settled in our accounts comes from the very sizable measures that are being taken at both a national and European level to support businesses.
- Selectivity and right timing in underwriting, capital preservation techniques and development of capital light business will advance our results.

As of today, based on a scenario of deep recession in 2020 followed by a partial recovery in 2021, we expect limited impact of COVID-19 on our activities and to report a profit in 2020 even if lower than expected in our Business Plan. Because of our focus on underserved growing markets - businesses with effective growth and restructuring plans, corporate distressed assets and direct banking services - the role of a bank such as illimity will become increasingly important over the next few months and years.