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Carige reviews profits after 5 years and accelerates on NPL transfers

11 May, Il Sole 24 Ore

“After five years of quarters in red, we’ve reported a positive result”, announced the Carige Ceo, Paolo Fiorentino, presenting the figures for January-March. The bank reported profits for 6.4 million euro in the first quarter of 2018 in comparison with the l41.1 million-losses registered in the same period of 2017.  The net operational proceeds grew by 18.5% amounting to 135.2 million, the interest margin grew by 5.3% (55.5 million), while net commissions by 6.7% (61.9 million). The cost containment is close to 10%: the core management costs decreased to 117.8 million (-5.7% cut of the personnel costs). These numbers caused the stocks to rise up to 2% and 3% in the Stock Exchange. The objective for 2018 is to achieve net profits for about 29 million.

Achieving the ECB target set for 2019 already in 2018

Even though the core business is recovering, the bank remains focused on risk reduction to improve the credit quality through operations on bad loans. In fact, the gross bad loans were in March 4.7 billion and have remained stable since December 2017. The ratio between the non-performing loans and the total gross assets is set at 26.7%, while the ratio between the non-performing loans and the total net assets is 15.6%. Considering the planned transfers, the goal is to achieve the targets imposed by the ECB for 2019 already by the end of 2018: the total gross bad loans is expected to be at the end of 2018, corresponding to 2.7 billion, against the objective set by the ECB for 2018 of 4.6 million (3.7 billion by 2019). By the end of 2020, the group will have a gross NPL portfolio of approximately 2.0 billion (1.0 billion net).

Thirty offers for the UTP portfolio worth 500 million

For this purpose, Fiorentino gave an update to the analysts on the transfer of unlikely to pay for 500 million gross to be concluded by December, which will be followed by other 200 million in 2019. The banks received non-binding offers from 30 different operators. “We received thirty non-binding offers from the main operators that trusted the financial feasibility of the operation” announced. Whereas the sale of the NPL management platform for 31 million was concluded yesterday. The buyer is Credito Fondiario.

Reopened the bond dossier: a 300-350 million subordinate coming soon

Approved the figures, the Carige management is now resuming the project of returning on the debt market with the issuance of a subordinate loan of approximately 350 million. “In the next few weeks, we’ll resume working on the file with an opportunistic perspective to see if there are the optimal conditions to grow in the market”, said the financial director Andrea Soro. Carige started working at the issuance in March with the assistance of Credit Suisse, JPMorgan and Deutsche Bank but it then decided to postpone the operation. “We’d already announced that we would have reconsidered the operation based on better market conditions than those of one month and a half ago – explained Soro. The quarter has been a breakthrough in terms of commercial results and profitability”. Due to funding necessities, Carige plans to place also a senior loan for 500 million by September and a covered bond of the same amount by the end of the year.

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi

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