(Alliance News) - Banca Profilo Spa announced Wednesday that it has approved its new 2024-2026 business plan, in which it plans to focus on distinctive niches with high profitability.

"The new 2024-26 business plan is set against a backdrop of uncertain financial markets, geopolitical instability, and limited visibility about the effects that high interest rates and inflation will have on economic growth, propensity to save, and household wealth creation. The business plan also considers the exhaustion of the restrictive monetary policy implemented so far, with a gradual reduction in interest rates expected over the next three years," the bank explained.

The plan is based on four key pillars: distinctive niches with high profitability; partnerships and growth by external routes; artificial intelligence and user experience; and People & Sustainability.

For Private Banking, the institution envisions organic growth through prospecting and induction of new banker teams, with a target of EUR6.5 billion in client assets through EUR1.1 billion in cumulative net inflows; an increase in profitability through a different product mix, maintaining the focus on private markets, including in the form of semi-liquid products, with a target of EUR500 million in total placements over the three-year period, and developing evolved advisory supported by the application of artificial intelligence algorithms, with a target of EUR1.2 billion in fee-based advisory funding to 2026.

With regard to Investment Banking, the range of services will be further expanded to develop the One Stop Bank model, as a single interlocutor for Italian SMEs able to find complete solutions to needs pertaining to business development through the different services offered, such as capital market, domestic and international M&A, extraordinary finance, private equity, pre-IPO equity and hybrid products.

In addition, lending activity is confirmed, both as acquisition financing to support M&A and as specific plafonds for secured financing, strengthening the related structure with the goal of EUR50 million in new disbursements; the structuring of one or more vehicles dedicated to the development of green initiatives, with particular attention to the world of photovoltaics, is planned in the area of sustainability; and long-term corporate relationships will be strengthened through capital market and direct lending activities, making Investment Banking an origination structure within the group, capable of maximizing cross-selling with other areas.

In Finance, consolidation will take place while maintaining a balance between the different revenue components and asset classes, in particular: the development of brokerage; the reorganization of equity trading; profitability from banking book; funding sources will be integrated with a view to diversification; and synergistic activity with the bank's other business divisions will continue, including through the issuance of certificates and structured deposits to customers.

On the Digital Bank front, the focus is expected to be on the profitability of the services offered, aiming at loyalty and increasing the share of wallet of each individual customer.

Finally, regarding the Digital Transformation Plan, this will leverage new technologies to scale innovation to support business and operational efficiency.

On the financial front, revenue growth is projected at EUR91 million in 2026, with a CAGR of 6 percent; the cost income ratio is expected to be below 70 percent; net income is expected at EUR18 million, with average annual growth of 11 percent; total client assets are projected up 11 percent annually, to EUR8 billion at the end of the plan; the CET 1 capital ratio is indicated to be above 20 percent over the three years of the plan; and the dividend payout is estimated to be above 80 percent, for a cumulative dividend payout of more than EUR35 million.

As for the individual divisions, Private Banking revenues are expected up 5.5% annually to EUR42 million at the end of the plan, with cost income ratio at 60% and assets of EUR6.5 billion; for Investment Banking, revenues are expected up 9.1% annually to EUR9 million; in Finance, revenues are expected up 5.5% each year to EUR36 million; and in Digital Bank, the estimate is EUR3 million and over EUR3560 million in funding to 2026.

Banca Profilo's stock is up 0.5 percent to EUR0.20 per share.

By Giuseppe Fabio Ciccomascolo, Alliance News senior reporter

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