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Banca Sistema

Strong lending growth and capital position

Update | Financials | 07 Nov 2018

Lending has grown by more than 40% year-on-year but mix changes and some lumpiness associated with late payment interest (LPI) have constrained earnings growth in 9M18. This effect should unwind as the business continues to grow. It would not require full delivery of the bank’s three-year plan targets, including ROE of over 18%, to warrant a higher valuation. The capital position remains strong with a CET1 ratio of 11.1%.

Banca Sistema

Meeting expectations

Update | Financials | 02 Aug 2018

Banca Sistema’s first half figures showed strong growth in customer loans against a stable market background for public authority receivables financing in Italy. The proposed reduction in risk weighting for salary and pension-backed lending bodes well for the bank’s other core activity. On maintained forecasts, the shares remain conservatively valued both on absolute and relative measures.

Banca Sistema

Growth on track

Update | Financials | 16 May 2018

There was a small one-off provision in the first quarter but, that aside, trading was in line with management expectations and Banca Sistema (BST) continues to focus on delivery of its recently published three-year plan which, on our estimates, points to substantial growth in receivables and earnings between 2018 and 2020. The shares in this specialist lender remain modestly valued, both in relative and absolute terms.

Banca Sistema

More opportunities, more growth

Update | Financials | 08 May 2018

Banca Sistema’s (BST) three-year plan has set clear targets, which point to faster growth in receivables and a lower cost of risk (and returns) than we had previously forecast. While there are risks in delivering any corporate plan, both the background in BST’s markets and the bank’s own planned actions to achieve its goals are encouraging. We have raised our estimates for 2019 and 2020 significantly, underlining the modest valuation of the shares.

Banca Sistema

FY17 result and a closer look at factoring income

Outlook | Financials | 16 Mar 2018

Banca Sistema (BST) reported moderate earnings growth for FY17 with factoring income tempered by mix and price effects while SME loan interest contracted as the book is run off. Positives included strong growth in factoring turnover and pension and salary backed lending with benefits to flow through in FY18 and beyond. Capital ratios indicate good headroom for further growth. The shares are cautiously rated relative to peers and publication of the business plan expected in April is a potential positive catalyst.

Banca Sistema

Loan growth and ROE are positive features

Update | Financials | 13 Nov 2017

Banca Sistema’s (BST) Q3 results showed continued growth in its main trade receivables financing and salary and pension-backed loan activities. Reported profits were augmented by a higher accrual rate for late payment interest but, excluding the element relating to prior years, BST still targets an ROAE of 20% for FY17. Given this and the potential for continued growth, the valuation in terms of price to book and multiples of our reduced earnings estimates appears very cautious.

Banca Sistema

Q2 shows further strength in factoring turnover

Update | Financials | 04 Aug 2017

Banca Sistema’s first half figures confirmed further strength in factoring turnover and overall loans outstanding. Market conditions for factoring in Italy remain favourable and salary and pension-backed lending continues to offer good opportunities with the potential for a lower capital burden subject to regulatory discussions. Banca Sistema still trades on modest multiples, but continued growth in the loan book combined with success in delivering a return on equity of over 20% should provide the basis for a rerating.

Banca Sistema

Growing speciality finance provider

Initiation | Financials | 08 May 2017

Banca Sistema's (BST) main activity is financing trade receivables from the Italian public sector. It also purchases commercial receivables and has a growing salary and pension backed loan business. It aspires to be the leading independent speciality finance provider in Italy. A modest valuation, capital headroom, potential for increased penetration of public sector factoring in Italy, market share gains for BST and the development of diversifying businesses combine to make an appealing investment proposition.