Italy’s First Digital Bank illimity Reports a Profit Driven by Robust Lending

Italy’s first digital bank, illimity, is reporting a pre-tax profit for the third quarter of €13.2 million (+31% over the previous quarter) and a net profit of €24 million in the first nine months of 2020. This compares to a loss of €18 million in the same period in 2019, according to company release.

illimity is a banking group founded and headed by CEO Corrado Passera. illimity extends financing to high-potential SMEs, purchases distressed corporate loans, and services these through its platform, neprix, while providing digital banking services through illimity bank. Over the next few months the company says it will set up and manage the first Alternative Investment Fund for corporate loans.

illimity began with a special purpose acquisition company (SPAC) SPAXS S.p.A., which raised €600 million. SPAXS subsequently acquired Banca Interprovinciale S.p.A., with the resulting merger between the two, giving rise to “illimity Bank S.p.A.” which has been listed on the Italian Stock Exchange since 5 March 2019, (ticker ILTY). Headquartered in Milan, illimity reports having 500 employees and closed its first year of activity with assets of €3 billion.

illimity recently announced a strategic initiative in its Direct Bank Division signing an agreement for the joint venture in HYPE, another challenger bank. This initiative is expected to provide momentum to the Bank’s strategy in digital financial services, creating a national champion in the field of Fintech platforms for digital services.

illimity reports that the main driver behind the rise in profits during the year has been the positive trend of net customer loans and investments, which totaled €1.83 billion as of September 30, 2020, representing a rise of 46% over the figure of €1.26 billion at the corresponding date in 2019.

The growth in the quarter can be attributed above all to the SME Division, with net customer loans rising by 12% over June 2020 to reach €685 million (more than double the figure for the corresponding period in 2019). illimity says the new business origination took off in the summer and continued after the end of the third quarter, with a positive contribution being made by all the business sectors – Factoring, Crossover & Acquisition Finance, and Turnaround etc.

The quality of illimity’s assets is said to be solid during the third quarter of 2020: no deterioration in the SME Division’s customer loans, with the ratio between gross doubtful organic loans and gross total organic loans to customers falling to 3.8%, and robust cash flow from purchased distressed loan portfolios.

Passera commented on the results:

“illimity’s first full year of activity, 2020, is turning out to be particularly significant. Despite the continuation of the crisis, the Bank is showing considerable resilience on every front and achieving very positive results: volumes and earnings have grown, capital and liquidity have risen above expectations. We are therefore able to confirm the target of an ROE of approximately 5% for the year.”

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