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illimity Starts 2024 with a 38% Increase in Profit, Despite the Slowdown in the Specialized Credit Area

Illimity, the challenger bank founded in 2019, saw a significant increase in net profit in the first quarter of 2024, rising by 38% to 10.8 million euros compared to the same period in 2023. This marked a strategic shift as the Corporate Banking area became the main source of profits, surpassing the Distressed Credit Division. The bank aims to focus on asset-based finance and tech initiatives to sustain profitability.




For illimity, the challenger bank created in 2019 on the initiative of CEO Corrado Passera on the basis of Banca Interprovinciale, 2024 has opened under the best auspices. In fact, in the first quarter of the year net profit jumped by 38%, to 10.8 million euros , compared to the same period in 2023.

But unlike all previous periods, this time there was an important passing of the baton, as for the first time the main source of profits was not the Distressed Credit Division , now renamed Specialized Credit, directed by Andrea Clamer. The latter has in fact passed the scepter to the Corporate Banking area , entrusted to the care of Enrico Fagioli. In fact, the former closed the first quarter of 204 with a pre-tax profit of 9.8 million euros , less than half of the 20.5 million recorded by the latter.

illimity focuses on asset-based finance

The change reflects the change in strategy decided in the final phase of 2023 and made official last February on the occasion of the presentation of the annual results, which envisages the abandonment of the investment activity in NPLs and the progressive exit from this business, increasingly less profitable and increasingly expensive due to the increase in rates and requirements in terms of calendar provisioning, which provide for unsecured NPLs to be fully covered within three years.

The banking group has instead decided to focus on asset-based finance, the management of single name UTP and services on behalf of third parties, first of all the servicing of UTP, through the subsidiary Arec Neprix, a servicer created at the beginning of 2023 from the merger between Neprix, entirely controlled by illimity and specialized in the management of distressed loans to mainly guaranteed companies, and AREC (acronym for Aurora Recovery Capital ), a company specialized in the management of Stage 2 and UTP loans with a focus on the corporate real estate segment, acquired in May 2022.

The company, which has a strong specialization in real estate, tripled the volume of assets managed on behalf of third parties, 9 billion euros at the end of March 2024 compared to 3 billion 12 months earlier, which contributed to the doubling of the commissions generated in the first quarter 2024 from the Specialized Credit area, 10 million euros, compared to 5.4 million 12 months previously.

Illimity’s contributions to UTPs linked to real estate of just under 1 billion euros in the second half of 2023 contributed to this result, especially to the Olympus 1 and 2 funds, jointly owned by illimity and Unicredit , and managed jointly by Banca Finint and Arec Neprix.

The reduction in the volume of NPLs under management, thanks to some sales in the secondary sector which took place in the second half of 2023 and were not communicated , also reduced the flow of interest from distressed positions to 16 million euros from 29 million in the first quarter of 2023. This, combined with write-downs and provisions more than doubling compared to 12 months earlier, it took the division’s pre-tax profit below double figures. NPEs currently remain on the balance sheet for around 140 million euros which, according to what company sources told BeBeez, “will be sold on the secondary market through securitisations which will be completed by June 30th.”

In the meantime, the revenues of the corporate banking division have increased significantly, thanks to the increase in credit volumes, for around 150 million euros, in the first quarter compared to a year earlier, and also to the trading of interest rate derivatives with companies, favored by volatility, which yielded commissions of 5 million euros. The much more favorable cost/income ratio of the division compared to Specialized Credit, whose management costs are much higher due to external services and legal charges, allowed the division to close with the aforementioned pre-tax profit do 20.5 million.

The Investment Banking division of illimity is also making progress , with a pre-tax profit of 2.6 million euros compared to 2.1 12 months ago, thanks to 115 million euros raised in the first quarter of 2024 through 10 ipos, including that of Bertolotti.

And while investment banking accelerates, technological businesses, in particular B-ilty, a digital bank dedicated to SMEs, and Hype , which provides payment services and current accounts on mobile devices to retail customers, are beginning to bear the first fruits.

The former in particular is a breath away from break even, with a pre-tax loss of only 40 thousand euros against credit volumes of 120 million euros at the end of March 2024, while for Hype the opening quarter of 2024 has coincided with the arrival of the first profits. The pre-tax profit was in fact 800 thousand euros, compared to a red of 2.9 million 12 months earlier, thanks to 1.8 million accounts and 36 million payments managed.

The fund management activity, carried out through illimity sgr, also led by Enrico Fagioli, is also making good progress, with a pre-tax profit almost doubling to 700 thousand euros from 400 thousand euros in the first quarter of 2023, thanks to the increase in assets under management of more than 500 million euros (+47% y/y) driven by the third fund, Selective Credit Fund with focus on ESG and dedicated to unlisted SMEs, launched in April 2023 which was added to the Credit & Corporate Turnaround fund . launched in 2021, and the Real Estate Credit fund , launched in August 2022.

The progress of the more “traditional” activities and the arrival of profits for those with a more technological content have therefore allowed illimity to compensate for the lack of much of the contribution of the Specialized Credit division. The result was an overall increase in revenues of 3% compared to the first quarter of 2023, against total operating costs that were essentially stable in absolute terms. Consequently, the capital strength remained solid, with a CET 1 ratio phased-in at 14.9% , well above the SREP requirement (9.60%).

“Despite the strategy aimed at reducing direct exposure to NPE portfolios, we improved profit thanks also to the growth of our businesses dedicated to the corporate world. Loans to SMEs have grown significantly compared to 2023 with a mix more focused on business performing, special situations and restructuring, thanks to the specialization gained in recent years. In the coming quarters we expect this trend to continue, supported by a robust pipeline and our capital strength. In the meantime, prospective tech initiatives will be able to provide further support to the growth of profitability” concludes Passera.


(Featured image by geralt via Pixabay)

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First published in Be Beez. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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Valerie Harrison is a mom of two who likes reporting about the world of finance. She learned about the value of investing at a young age upon taking over her family's textile business when she was just a teenager. Valerie's passion for writing can be traced back to working with an editorial team at her corporate job, where she spent significant time working on market analysis and stock market predictions. Her portfolio includes real estate funds, government bonds, and equities in emerging markets such as cannabis, artificial intelligence, and cryptocurrencies.