Credito Emiliano (FRA:EAO) H1 2024 Earnings Call Highlights: Record Net Profit and Robust ...

GuruFocus News
4 min read

In This Article:

  • Net Profit: EUR324 million, a record result.

  • Annualized ROTE: 20%.

  • Annualized ROE: 17%.

  • NPL Ratio: Below 0.8%.

  • CET1 Ratio: 15.72%, with a buffer of 812 basis points versus regulatory requirements.

  • Net Production: EUR2.7 billion in direct funding, assets under management, and insurance inflows.

  • Customer Base Growth: 6% increase, now exceeding 1.5 million customers.

  • Core Income Growth: Up 8% year-on-year.

  • Total Revenues: Over EUR1 billion, with an 8.7% growth.

  • Net Operating Profit: EUR532 million, 10% higher.

  • Net Interest Income: Positive performance, flat in Q2 versus Q1 2024.

  • Non-Interest Margin: EUR220 million, up 7% year-on-year.

  • Loan Growth: Over 1% on a yearly basis, outperforming the market.

  • Deposits and Assets Under Management: EUR101 billion, with a 4% increase in direct funding.

  • NPL Coverage: 59%.

  • Liquidity Ratios: LCR close to 190%.

Release Date: August 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Credito Emiliano (FRA:EAO) achieved a record net profit of EUR 324 million in H1 2024, marking its best result ever.

  • The company reported strong asset quality with an NPL ratio below 0.8%, better than the Italian average.

  • Credito Emiliano's CET1 ratio stands at 15.72%, providing a buffer of 812 basis points above regulatory requirements.

  • The bank's business model shows excellent diversification, with significant contributions from various revenue streams, including wealth management and private banking.

  • Credito Emiliano has successfully expanded its customer base to over 1.5 million, with a 6% growth over the last 12 months.

Negative Points

  • The economic environment remains uncertain, with potential challenges from declining interest rates impacting future profitability.

  • Operating costs have increased due to higher labor contract costs and IT project investments.

  • Short-term loans are experiencing a decline as companies adopt a wait-and-see attitude amid high interest rates.

  • The bank's sensitivity to interest rate changes indicates a potential negative impact of EUR 65 million if rates decrease by 100 basis points.

  • Despite strong capital generation, the current payout ratio is lower than the industry average, raising questions about future capital allocation strategies.

Q & A Highlights

Q: What led to the positive trend in assets under management in Q2, and what impact do you expect from Basel IV in 2025? A: Angelo Campani, General Manager, explained that the focus on strengthening private banking and consultancy contributed to the positive trend in assets under management. Alessandro Cucchi, Co-Vice Central Director, added that the overall impact of Basel IV is estimated to be about 60 basis points, with 50 expected in 2025 and 10 in 2026.

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