Release Date: February 10, 2025

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

Positive Points

• BFF Bank SpA (FRA:2BF) reported a profit of 250 million, showing significant growth from the previous year's 143 million.
• Loan growth increased by 5% overall and 7% in Italy, with record volumes in Q4.
• The bank's liquidity remains strong with a loan to deposit ratio of 69%, and capital levels are above target ratios.
• The bank received approval from the Bank of Italy to open a deposit gathering franchise in Greece, expanding its market presence.
• The bank has reinforced its commercial team and expects to achieve a 10% growth rate going forward, supported by a return to pre-2020 collection processes.

Negative Points

• The past year was challenging, with a focus on reclassification of past dues impacting growth.
• The cost of funding increased due to higher interest rates and bond issuance.
• The bank experienced a decline in outstanding loans in Spain and Portugal due to government interventions.
• The reclassification of past dues led to a temporary loss of growth momentum, affecting the 2024 performance.
• There is uncertainty regarding the Bank of Italy's restrictions on dividends, which could impact future payouts.

Q & A Highlights

• Warning! GuruFocus has detected 2 Warning Signs with FRA:2BF.

Q: Can you provide some color on the expected loan portfolio growth for 2025 and 2026? A: We do not provide specific year-to-year guidance, but we aim for a 10% annual growth target. The performance at the end of 2025 will significantly influence 2026. We aim to buy as much public sector receivable as possible from high-quality customers. (Unidentified_2)

Q: Are you seeing any changes in the average payment time of the public administration in Italy? A: We haven't observed a significant shift in payment times. Our business tends to buy from parts of the distribution that do not pay as well as the average. For example, we buy less in Lombardy and more in Carrari. (Unidentified_2)

Q: Did the volumes in the last quarter include contributions from the new contract announced with the 9-month results? A: Yes, the volumes reflect the new contract in Italy, particularly in the NHS segment, not in the public administration. (Unidentified_2)

Q: When should we expect a decline in the stock of past due due to the recovery of the contagion portfolio? A: We have reduced the contagion portfolio by 20% over six months, and we expect this trend to continue. The reduction depends on our counterparts' willingness to pay. (Unidentified_2)

Q: Does your 2026 guidance include benefits from the late payment directive review? A: No, our guidance does not include any impact from the late payment directive review as it has not been enacted yet. (Unidentified_2)

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