Illimity bank, Corrado Passera’s digital bank, today presented the business plan 2021-25. The market welcomed the presentation with a drop (at the moment the stock marks -4.5% at 11.43 euros) despite the management’s objectives and estimates exceeding expectations.
The plan’s targets are ambitious and envisage an average annual growth in profit of 50%, return for shareholders (ROE) of 15-20% in the three-year period 2023-2025 and high capitalization (Net Equity at 1 billion in 2023 and at 1, 4 billion in 2025 with CET1 ratio always above 15%).
Dividends starting from the 2022 financial statements
The company plans to distribute a total dividend of 180 million over the course of the plan. A flexible dividend policy is envisaged with the determination of a pay-out ratio between 20% and 30% over the Plan period “And which will be calibrated from time to time according to the concrete availability of investments with a high return on capital”. The first dividend will be valid on the net profit for the year 2022 with a payout of 20%.
The data also highlighted the improvement in the bank’s efficiency indicators with a Cost-income ratio of less than 40%, and a cost of risk of 90 bps in 2025, down compared to the plan.
The bank expects to set aside more reserves, while keeping the risk profile of the assets low, due to an expected increase in volumes. The breakdown of revenues relies on a higher than estimated contribution from commissions and other revenues (which include the contribution of Neprix Sales, B-Ilty, capital market and SGR), which are however partially offset by a lower Net interest income, whose estimates are in any case higher than expected (240 million vs expectations for 208 million in the five-year period).
ION enters with a 7.3% stake
Finally, in conjunction with the new plan, the partnership con ION, an English fund led by the fintech businessman Andrea Pignataro and which is the major shareholder of Cedacri, a company specializing in IT outsourcing services for the banking sector. The agreement provides for the license to use the information systems developed by Illimity (this service will generate estimated cumulative revenues of 90 million euros in the period 2021-2025) and the entry into the capital of ION through the subscription of 5.75 million shares at 10 euros per share (7.3% stake), and the assignment of warrants to subscribe an additional 2.4 million shares (2.7%) between March and July 2022 at 12.5 euros per share.
“The commercial and technological synergies that can come from this alliance are particularly relevant”, explained Corrado Passera regarding the agreement with ION.
The numbers on the stock market, Passera has no doubts about the 1 billion milestone
During the presentation of the new strategic plan to 2025, Passera also focused on the valuation of Illimity on the Stock Exchange, with the goal of a billion market cap which is not that far off. “Obviously we will pass it great, we just have to see the when”, were the words marked by the optimism of Passera.
To date, Illimity capitalizes just under 850 million and in recent weeks has reached an all-time high of 12.35 euros.