Summary
Financial results 9M18 vs 9M17
Gross Collections: €1.33bn vs €1.23bn in 9M17 (+8%), with significant acceleration in Q3
Gross Revenues: €162m, +11% vs €146m in 9M17, higher fees and ancillary revenues
Net Revenues: €146m, +10% vs €132m in 9M17, stable NPL outsourcing fees as % of revenues
EBITDA: €54m vs €42m in 9M17 (+30%), EBITDA margin up from 29% to 34%
Net Income: €35m vs €27m in 9M17 (+29%), including €0.9m (pre-tax) gain from BCC GeCre 45% stake sale to Iccrea
Net Cash Position: €38m post dividend payment and second tranche of Italian Recovery Fund investment (€13m); improving NWC and Cash conversion (EBITDA-Capex) at 94%
Large portfolio wins in a growing Italian NPL servicing market: +€15bn GBV
On-boarding of €12.1bn new mandates: impact of collections fully visible in Q3
€2.8bn recent awards (BAPR and Iccrea), size and terms in line with expectations
Main events
YTD
2018-2020 Business Plan providing a mid-term path to revenue growth and margin expansion
Re-organization of operating companies approved by Regulator to be completed by YE
Greek market entry, landmark €1.8bn GBV servicing mandate with four systemic banks
Actively looking at M&A opportunities with focus on Southern Europe and the participation in the Banco BPM process (binging offer phase in November)
Market outlook: doBank currently taking part in several processes within an active short-term pipeline, both in Italy NPL, Italy UTP and Greece
Confirmed 2018 guidance for new portfolio wins in NPL Italy (on top of the €12.1bn already on-boarded), lower end of guidance already achieved
What's next
Business Plan execution: development of UTP and Greek servicing businesses, IT investments to deliver significant increase in operational efficiency
Focus on cost control and operating leverage while actively exploring M&A opportunities, counting on available leverage up to approx. 3x Net Debt/EBITDA from 2019
1
Active short-term pipeline in Italy in excess of €30bn GBV
ECB NPL guidelines and Calendar Provisioning combined with IFRS9 introduction and GACS scheme have provided an incentive for banks to continue improving their asset quality
Future secondary market opportunity following the ~€70bn and >€60bn transactions in 2017 and 2018
Primary transaction pipeline
SELLER
GBV (€bn)Details
Secondary transaction pipeline
SELLER
GBV (€bn)Details
5.4 | NPLsecuredandunsecured,project "Poppy" | |
CRC & Bayview | 2.0 | Mixed NPL, project "Beyond the Clouds" |
Others | 2.4 | 5 transactions, secured and unsecured |
No signs of slowdown in transaction pipeline, strong investor interest confirmed
Source: doBank analysis on press reports
Servicing market to offer significant growth potential
UTP servicingItaly
Market potential
Servicing market at ca.240bn in M/T
Regulatory framework still supportive, lots of work to do for banks:
Total new inflows (including portfolio sales): €84bn in 2018E, €20bn in 2019E, and €13bn in 2020E
Growing outsourcing levels
Following jumbo deals, market focused on mid-sized GACS transactions and platform sales with long-term flow agreements
UTP exposures expected to become the next area of focus for banks' asset quality
Recent updates
€2.8bn new NPL mandates already achieved, reinforcing conviction on 2018 GBV target of up to €5bn (in addition to the new mandates already secured in YTD 2018)
Strengthening of UTP team capabilities continues
Servicing market at €18bn in 2018E, expected at >€25bn in M/T
Ongoing discussion with major Italian banks on UTP servicing mandates
Currently doing Due Diligence with investors in UTP sales processes
Early stage market with significant growth potential and no incumbent
€40bn NPL reduction by 2019 target by BoG/SSN out of more than €90bn total NPL
€1.8bn mandate with 4 systemic banks proceeding well, currently in business planning phase, collections to begin in January 2019
Currently doing Due Diligence with investors in NPE sales processes
Confirmed focus on core Italian Bad Loans market while adding new sources of growth by products and countries
Resiliency to macro cycles: a long-dated track record
No indication of possible regulatory changes in Italy affecting our business model
Track record of meeting KPIs during the previous cycles, managing the effect of macro cycles on collections
Investors portfolios performance1
Strong, consistent performance across economic cycles for Investors clients' portfolios
Limited underperformance during recession
Actual pace of cash collections averaged 104% of forecasted collections
Collections during the previous cycles in line with typical
1. Represents total collections received to date versus underwriting projections for the same period
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doBank S.p.A. published this content on 09 November 2018 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 09 November 2018 13:38:11 UTC