Banca Ifis Targets Higher Annual Profit, Revenue Over 3 Years

Banca Ifis SpA, an Italian financial-services company, expects profit will rise each year over the next three years on lower funding costs and higher returns from distressed loans.

The bank, which is controlled by a member of the Furstenberg family, raised its return-on-equity forecast for 2013 to 25 percent from 20 percent previously, Chief Executive Officer Giovanni Bossi said in an interview.

“We raised our targets on ROE and see our net income growing each year of the three-year business plan ending in 2015,” Bossi said. “We will cut cost of funding by 1 percent next year and 0.5 percent in 2015, to offset lower income from our government bond portfolio.”

The company, which raises money to lend its customers through an online deposit account called “Rendimax,” will generate 40 million euros ($53 million) of savings next year lowering interest rates paid to customers, Bossi said. Deposits totaled 3.9 billion euros as of June 19, up from 3.6 billion euros at the end of the first quarter.

Banca Ifis plans to focus on boosting margins from recovery of distressed loans and reducing volatile revenue from its sovereign-bond portfolio. The Venice-based company plans to reduce its Italian sovereign debt holdings by more than half next year to concentrate on “more stable revenue,” Bossi said.

Sovereign Debt

Ifis owns 7.8 billion euros of Italian bonds, or 24 times its tangible equity with an average maturity of about 2 years, an investment that is about 30 times bigger than one by UniCredit SpA, the nation’s largest lender. Bossi will reduce bond holdings to 3.3 billion euros by the end 2014 and to 2.2 billion euros by end-2015.

“We expect lower income of about 60 million euros next year due to this disinvestment, which will be offset by higher revenue from our core business,” Bossi said. Total revenue will increase by a “high single-digit” percentage in 2013, 2014 and 2015, he said. Annual revenue growth from the recovery of non-performing loans and trade receivables will be 15 percent to 20 percent over the next three years.

Ifis net income rose 14 percent in the first quarter to 22.5 million euros.

Banca Ifis is controlled by Sebastien Von Furstenberg, the son of Clara Agnelli, a sister of former Fiat SpA patriarch Giovanni Agnelli. The stock, which was down 0.6 percent to 8.15 euros as of 9:15 a.m. in Milan, has gained about 50 percent this year, compared with a 4 percent increase of the FTSE Italia All-Share Financial Services Index, giving it a market value of 439 million euros.

Before it's here, it's on the Bloomberg Terminal.