(Alliance News) - BFF Bank Spa reported Thursday that it has seen its 2022 net income rise to EUR232.0 million from EUR197.4 million in 2021, at the same time revising its 2023 adjusted net income target upward.

The 2023 adjusted net income target is increased to EUR180-190 million from the previous range of EUR170-180 million. The revised mid-term targets will be published before the announcement of results for the first half of 2023.

"The upward revision is mainly driven by the positive impact from the change of the accrual of the IdM recovery rate to 50 percent from the previous 45 percent, the accrual accounting of the collection rights of the recovery costs, previously accounted for in cash, the increase of the IdM rate as of January 1, 2023 despite the impact of Arca's exit, the time lag in factoring repricing, the lengthening of the days of IdM collection, and the inflationary effect on costs," the bank explained.

Returning to the 2022 accounts, BFF Bank reported an interest margin of EUR261.8 million from EUR190.8 million in the previous year and an intermediation margin of EUR380.2 million from EUR271.9 million a year earlier.

The group continues to benefit from a very low exposure to the private sector. Net non-performing loans, excluding distressed Italian municipalities, stood at EUR6.7 million, or 0.1 percent of net loans, with a coverage ratio at 74 percent, improved from September 2022 and December 2021. Dissolved Italian municipalities are classified as NPLs by regulatory provision, despite the fact that BFF is entitled to receive 100% of the principal and default interest at the end of the dissolution process.

The annualized cost of risk on loans is 11.2 basis points in 12 months 2022, up from previous periods mainly related to specific provisions for exposures to the private sector in Poland.

Total net impaired loans amounted to EUR283.8 million as of December 2022, stable compared to September 30, 2022 and with 92 percent of exposure to the public sector.

The group maintains a strong capital position, with a Common Equity Tier 1 ratio of 16.9 percent compared to SREP's 9.00 percent. The Total Capital ratio is 22.3%, well above the TCR target of 15.00%, and 12.50% of SREP, with EUR201 million of capital in excess of the 15.0% TCR target. Both ratios exclude EUR77.5 million in dividends, which will be paid after the ordinary shareholders' meeting on April 13, 2023.

The dividend for fiscal year 2022 is EUR146.0 million and also includes the EUR68.5 million interim dividend paid in August 2022. Since the IPO, BFF has repaid more than EUR615 million in dividends to its shareholders, about 77 percent of the market capitalization at the time of the IPO.

As of Dec. 31, 2022, risk-weighted assets were EUR2.7 billion compared to EUR2.2 billion as of Dec. 31, 2021 and EUR1.6 billion as of Dec. 31, 2020, with a density4 of 42% compared to 45% at the end of December 2021 and 39% at the end of December 2020. In 2022, the growth of the loan portfolio drove the decline in the density of RWAs compared to FY 2021 despite the implementation of the new guidelines on "New DoD."

As of December 31, 2022, the consolidated balance sheet was EUR13.3 billion, up EUR2.2 billion or 19 percent from December 31, 2021. In terms of total assets, at the end of FY2022, the loan portfolio is EUR5.44 billion, up EUR1.7 billion or 45% from EUR3.76 billion at the end of FY2021, at an all-time high, with a strong performance from Italy, up 59% year-on-year.

As of December 31, 2022, the government securities portfolio is fully classified as HTC. The securities portfolio stood at EUR6.1 billion at the end of December 2022 compared to EUR5.8 billion at the end of 2021, with EUR4.2 million in floating-rate securities and EUR1.9 billion in fixed-rate securities, following a portfolio rebalancing strategy to increase floating-rate securities to benefit from rising interest rates.

BFF Bank's stock is up 1.8 percent at EUR8.82 per share.

By Giuseppe Fabio Ciccomascolo, Alliance News senior reporter

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