In This Article:
Release Date: February 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Credito Emiliano (CDEFF) achieved a net profit of 620 million euros, up 10% year-on-year, showcasing strong financial performance.
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The company maintained a high capital soundness with a CET1 ratio of 15.53%, providing a robust buffer against regulatory requirements.
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Loans to customers increased by 1.8% year-on-year, demonstrating growth in both family and corporate sectors.
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Credito Emiliano (CDEFF) has a strong focus on digitalization, investing in innovative technologies to enhance customer experience and operational efficiency.
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The company has a diversified revenue stream, with recurring commissions and fees making up about 40% of revenues, providing stability against interest rate fluctuations.
Negative Points
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Net interest income (NI) slightly declined in the last quarter of 2024, indicating potential challenges in maintaining interest margins.
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There is an expectation of further interest rate cuts in 2025, which could impact future profitability.
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Administrative expenses increased due to ICT spending and personal costs, which could pressure profit margins if not managed effectively.
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The company anticipates a slight worsening in asset quality in 2025, although it expects to remain below the threshold of 20 basis points for cost of risk.
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Despite a strong dividend payout, the payout ratio remains cautious at 41%, which is below the average of its peers, potentially limiting shareholder returns.
Q & A Highlights
Q: What are Credito Emiliano's targets for growing loans and deposits in 2025, and what are the expectations for net interest income (NI) given the current spread curve? A: The General Manager, Angelo Campani, stated that they expect a shrinking of interest rates in 2025 with a recovery in 2026. They aim to increase volumes sustainably and defend customer spread, which declined less than the industry average in 2024. They anticipate a growth estimate in loans of about 2-3% and aim for inflows exceeding 4.5 billion euros, with a focus on converting deposits to asset management products to enhance cross-selling opportunities.
Q: Could you provide an update on the regulatory amendments affecting capital and dividends, and the rationale behind the cautious dividend payout? A: CFO Mr. Cainia explained that regulatory changes are expected to be implemented by the end of 2025, with discussions starting in 2026. The dividend payout is cautious to balance rewarding shareholders and maintaining capital soundness. They aim for sustained growth and are preparing for the regulatory impact of Basel IV. The historical performance of dividends suggests a consistent increase, reflecting the board's perspective.