CREDEM - Credito Emiliano S.p.A.

11/08/2018 | Press release | Distributed by Public on 11/08/2018 12:23

Credem, 9m18 consolidated results: €151 million net profit (+3.1% yoy), more than 77 thousand new customers, loans at €24 billion (+2.6% yoy), CET1 ratio at 13.14%


CUSTOMERS(1), LOANS(2) AT €24 BILLION (+2.6% YoY), CET1 RATIO(3) AT 13.14%


  • CET1 Ratio(3) at 13.14%, among the highest in the industry (alreadyincluding the IFRS9 full impact), up by almost 20 bps compared to 1H18;

  • More than 570 bps buffer vs 2018 ECB minimum regulatory requirement (SREP(4) 7.375%).

  • Loans(2) to Customers at +2.6% YoY at €24 billion (vs +1.55% YoY of the industry(5)), +618 YoY million in absolute terms;

  • Gross Non Performing Loans Ratio (NPL Ratio(6)) at 5.1% compared to Italian banks' average(7) at 9.7%. Coverage ratio including shortfall (8) at 66.2% on NPL and at 83.4% on Bad Loans;

  • Group Customers' Funding(2) at 23.1 billion, +8.1% YoY (vs +0.2% YoY of the industry (5));

  • More than 77 thousand new customers (1).

  • 235 new hirings (9) during the first nine months of the year, out of which 75.3% were young professionals; staff growing 1.3% YoY(9);

  • More than 4.5 days of training on average per worker.

  • Consolidated Net Profit at €151 million, +3.1% YoY. Net of the contribution to Single Resolution Fund and Deposit Guarantee Scheme, Net Consolidated Profit would have been 168.1 million.

Nazzareno Gregori, Credem's General Manager declared: "I am very satisfied with our 9M18 outstanding results, achieved in such a turbulent and uncertain environment. Our Group confirmed its position at the top of the banking system, continuing to acquire new clients and to offer cutting-edge services. All of the Group's people made such accomplishments possible. We kept investing materially not only on training our salesforce, central staff, and all Group's companies, but also on our organizational structure in order to better meet our clients' needs. During the next months, despite the well-known financial market complexities, we believe that our sound position will allow us to grow organically, mainly by focusing on our relationship mangers' expertise, on insurance services, and on lending to families and corporations."

Today Credem's Board of Directors, chaired by Lucio Igino Zanon di Valgiurata, approved 9M18 individual and consolidated financial results.

Despite the recent financial markets' and Italian government bonds' volatility and already including the IFRS9 principles full impact (with no benefits from transitional arrangement), the Group proved once again its ability to organically generate capital by increasing even furtherly its capital ratios, already among the highest in the banking industry. Indeed, CET1 Ratio(3) grew at 13.14%, compared to 12.96% of 1H18, with more than 570 bps buffer vs ECB minimum regulatory requirement (SREP 7.375%)(4); the latter is the lowest among Italian banks supervised by ECB. Furthermore, the growth strategy continued vigorously throughout, among other things, the acquisition of 77 thousand new customers(1) year to date, confirming Italian families and corporations' trust towards the Group. Accordingly, 9M18 Group Customers' Funding(2) grew by 2.1% YoY and reached €67 billion (+1.4 billion in absolute terms YoY), out of which €23.1 billion of Direct Deposit (+8.1% YoY), €26.5 billion of AUM (-1.2% YoY) and €7 billion of Insurance Reserves (+5.3% YoY), proving that our clients kept acknowledging the quality of the services offered by the Group. The Group kept also supporting the Italian economy with Loans(2) to Customers up by +2.6% YoY (compared to +1.55% of the industry(5)) at €24 billion. Such growth was performed not compromising anyhow the outstanding asset quality, already at the top of the Italian banking industry with NPL ratio(6) at 5.1%, compared to 9.7% average of significant Italian banks(7), and coverage ratios including shortfall(8) at 66.2% on NPL and on 83.4% on Bad Loans. The continuous investment on people lead to 235 new hirings(9) out of which 75.3% were young professionals, total staff(9) +1.3% YoY, and to more than 4.5 days of training per worker on average. Moreover, the Group registered €151 million of Consolidated Net Profit, compared to €146.5 million of 9M17 (+3.1% YoY). The figure, not including the contribution to Single Resolution Fund and Deposit Guarantee Scheme, would have been 168.1 million.

Credem Group: summary

1910The Company was founded

661 19

Branches, Corporate Centers, Small Business Centers, Financial StoresItalian Regions in which the Group is located


821 190 95

Financial Advisors with mandateFinancial Subagents

Salary backed loans Agents

Consolidated Income Statement(10)(*)

As of the end of September 2018, Operating Income was €867.4, compared to €850.6 million of 9M17 (+2% YoY). Within the aggregate, Interest Margin(11) reached €366 million, +3% compared to €355.3 million of 9M17. Non Interest Income(12)(13) was €501.4 million, +1.2% compared to €495.3 of the previous year, despite the lower contribution of Income from Financial Activities. More in detail, Net Commissions were €397.1 (+2.5% YoY), out of which €265.1 million of Asset Management and Brokerage Fees (+4% YoY) and €132 million of Banking Fees (-0.6% YoY). Income

from Financial Activities was €43.9 million, -25% YoY. Insurance Income reached €45.6 million (+23.9% YoY).

Operating Costs(13) were €551.7 million compared to €539.2 million of 9M17 (+2.3% YoY). In detail, Administrative Expenses were €175.9 million (+3% YoY), whereas Payroll amounted to €375.8 million (+2% YoY).

Cost/Income Ratio(14) was 63.6%, in line with 63.4% of 9M17 and 62.7% of FY17.

Gross Operating Profit was €315.7 million compared to €311.4 million of the previous year (+1.4% YoY). D&A were influenced by the strong investment policy of the Group and therefore equaled €39 million, compared to €36.1 million of September 2017 (+8% YoY).

Operating Profit was €276.7 million compared to €275.3 million of September 2017 (+0.5% YoY).

Provisions for Risk and Charges were -8.2 million, compared to €0.8 million of the previous year. Net Adjustments to Loans were down by 33.8% YoY at €26 million compared to €39.3 million of 9M17.

Net Extraordinary Income/Charges(13) amounted to -21.6 million (-€20.9 million of 9M17) and includes, among other things, €25.5 million contribution, gross of fiscal effect, to Single Resolution Fund (including the 2Q18 extra fee) and to Deposit Guarantee Scheme.

Profit Before Tax reached €220.9 million compared to €215.9 million of 9M17 (+2.3% YoY), whereas Income Taxes for the period were €69.9 million (€69.4 million in 9M17, +0.7% YoY).

Net Consolidated Profit for the Period was up by 3.1% YoY, reaching €151 million, compared to €146.5 million of 9M17.

Consolidated Balance Sheet (2)(*)

Group Customers' Funding at the end of 9M18 was up 2.1% YoY, reaching €66,990 million (€65,610 million in 9M17). Group's Total Funding reached €78,942 million, +1.8% YoY compared to €77,526 million of 9M17. In detail, Direct Deposits from Customers amounted to €23,128 million, compared to €21,401 million of 9M17 (+8.1% YoY). Total Direct Deposits was €25,628 million compared to €23,901 million of 9M17 (+7.2% YoY). Insurance Reserves was €7,015 million, +5.3% compared to €6,660 million of 9M17. Indirect Deposits from clientele was €36,872 million compared to €37,549 million of 9M17 (-1.8% YoY), negatively influenced by the adverse market conditions. In detail, AUM was €26,520 million, -1.2% compared to €26,841 million of 9M17. Within this aggregate, Portfolio Management Accounts were €6,250 million (-7.8% YoY), Mutual Funds and SICAVs were €11,525 million (-3.3% YoY), and third parties products and other AUM were €8,745 million (+7.4% YoY).

Loans to Customers were up by 2.6% YoY (compared to +1.55% of the industry(5)) and reached €24,092 million compared to €23,474 million of 9M17, still maintaining a constant focus on the asset quality.

Net Bad Loans Ratio was 1.05% (compared to 1.43% of 9M17), significantly lower compared to 2.32% of the industry(5). Bad Loans Coverage was 68.4% (60.9% in 9M17); such figure including shortfall(8) was 83.4%. Net Non Performing Loans were €603.9 million, - 22.9% compared to €782.8 million in 9M17. Gross Non Performing Loans were €1,254.9 million, -10% compared to €1,394.6 million of 9M17. Gross NPL Coverage ratio was 51.9% (43.9% in 9M17); such figure including shortfall(8) reached 66.2%. Gross NPL Ratio(6) was 5.1% (5.8% in 9M17), compared to 9.7% of significant Italian banks' average(7). Annualized Cost of Risk(15) remained remarkably low at 14 bps as of end of September 2018.

Capital Ratios

CET1 ratio(3) calculated on Credemholding perimeter was 13.14%, almost 20 bps more than 12.96% of 1H18 and among the highest in the industry, despite the recent financial markets' and Italian government bonds' volatility; furthermore Credem Group choose not to apply for the IFRS9 transitional arrangement and therefore capital ratios already include the full impact of the new accounting standard. Tier 1 Capital Ratio(3) was 13.47% and Total Capital Ratio(3) was 15.37%. 2018 SREP(4) was 7.375%, the lowest requirement among the Italian banks supervised by ECB.

Forecast on operating trends and evolution of the business

Credem Group's main guidelines foresee a further expansion both on lending and funding from clientele. Such expansion will be supported by an investment strategy aimed at improving the service quality, in terms of both product offering and digitalization process. The Group will keep on strengthening its Wealth Management area, both at production and distribution levels, also to better face the higher volatility coming from financial markets and Italian government bonds. Hence, the Banking Group Securities portfolio will continue to be highly diversified accordingly, in order to manage a potential own funds future volatility however counterbalanced by Credem's sound capital position (with IFRS9 already "fully applied"). In such scenario, 4Q context will not materially differ from the one experienced year to date, however, some discontinuity compared to last months might occur, although in line with what foreseen by the mid-term plan. In particular, this might pertain the cost of risk evolution, which has remained exceptionally low so far.

Other Information

On August 31, 2018, Fitch Ratings (Fitch) affirmed Italy's Long Term rating at "BBB" but revised its Outlook from "Stable" to "Negative". The decision was mainly driven by the agency expectation of a degree of fiscal loosening paired with a context of high public debt and political uncertainty. On September 5, 2018, following the above mentioned rating action taken on the sovereign, Fitch revised the Outlook of the 5 Italian banks whose rating was in line with Italian Govies (the agency's methodology does not foresee domestic banks to have ratings higher than the sovereign). Credem's Long Term rating was therefore confirmed at "BBB" while its Outlook was revised from "Stable" to "Negative", only as a mere consequence of the decision taken on Italy's Outlook and in accordance with Fitch's view that the bank should not be rated above Italy's rating. Nevertheless, Fitch highlighted that despite Credem activities being predominantly domestic, its business model resulted in a more resilient profitability and a healthier asset quality than its Italian peers. Indeed,

Credem's profitability was mainly supported by a strong asset quality and by wealth management and insurance activities that have contributed fee and commission income during the years of low interest rates.

All Credem's ratings remained unchanged, as follows: Long Term IDR: affirmed at "BBB", Short Term IDR: affirmed at "F2", Support Rating: affirmed at "5", Support Rating Floor: affirmed at "No Floor", Viability Rating: affirmed at "bbb", Derivative Counterparty Rating: affirmed at "BBB(dcr)", Senior unsecured EMTN programme: affirmed at "BBB".

On October 19, 2018, Moody's Investors Services (Moody's) downgraded the Government of Italy's local and foreign-currency issuer ratings to Baa3 from Baa2 and the outlook on the rating has been changed to stable. On October 23, 2018, as a consequence of the rating action taken on the Italian Government bonds, Moody's downgraded also some domestic banking groups' ratings, given that, according to its methodology, "Long Term Counterparty Risk Assessments" (CRA) do not typically exceed by more than one level (notch) the rating of the sovereign in which the bank is domiciled. As a result, and only due to the rating action taken on Italy, also Credem's CRA was downgraded to Baa2 from Baa1, while the outlook changed to Stable from Negative. Credem Group's ratings are as follows: Long Term Counterparty Risk Assessment: "Baa2" (from "Baa1"); Short-term Counterparty Risk Assessment: affirmed at "P-2"; Long Term Counterparty Risk Rating: affirmed at "Baa1"; Short Term Counterparty Risk Rating: affirmed at "P-2"; Subordinate Regular Bond/Debenture: affirmed at "Ba1"; Long-term Bank Deposits: "Baa3" (from "Baa2"); Short-term Bank Deposits: "P-3" (from "P-2"); Outlook: "Stable" (from "Negative").

On October 30, 2018, S&P Global Ratings (S&P) affirmed all Credem's ratings together with its Outlook, which remained "Stable". Such decision reflected the agency's opinion that Credem has a superior asset quality and a resilient profitability that will continue to benefit from lower credit losses than those of its peers. In detail, the ratings assigned to Credem remained the following: Long-term rating affirmed at "BBB-"; Short-term rating affirmed at "A-3";Outlook affirmed at "Stable". Such decision on Credem was taken despite on October 26, 2018, S&P revised to "Negative" from "Stable" the Republic of Italy's Outlook, while affirming its Long-term and Short-term ratings.


In accordance with paragraph 2 of Article 154-bis of the Consolidated Law on Finance (D. Lgs. 58/98 "Testo Unico delle disposizioni in materia di intermediazione finanziaria"), the Financial Reporting Manager Paolo Tommasini declares that the accounting information, both individual and consolidated, contained in this press release corresponds to document results, books and accounting records.


Find here below the consolidated and individual balance sheet, income statement and the reclassified consolidated P&L. The 9M18 consolidated financial report is not subject to external audit. Further information of Credem and on its subsidiaries are available on, 9M18 results presentation will be soon available under the section "Investor Relations" of the corporate website.


Credem Group adopts a set of Alternative Performance Measures ("APMs") in order to enhance a deeper comprehension of the information regarding the economic and financial trends. At this link is available a table illustrating the definition and the calculation of each APM used by the Group, as well as a reconciliation with the lines in the financial reports and related comments.


  • (1) data referred to Credito Emiliano Spa only;

  • (2) Loans to Customers do not include repos with "Cassa di Compensazione e Garanzia" and, as of September 2018, securities at amortized cost (€2,282 million). Group's Direct Deposits include the contribution from all companies belonging to the banking group, while Insurance Reserves include Credemvita's technical reserves and financial liabilities valued at fair value. Total Customers' Funding is net of bonds issued to institutional investors and indirect deposits from financial institutions. Total Customers' Funding includes also Insurance Reserves;