Earnings Call: Q2 2025

Sep 2, 2025

Good morning. This is the Chorus Call operator. Welcome to the conference call presenting 2025 half-year results of Generalfinance. Let me remind you that all participants are in listen-only mode. After the presentation, a Q&A session will be held. The presentation can be downloaded from the site www.generalfinance.it if you click on our homepage banner. To be assisted by an operator during the conference call, press star and zero on your phone handset. Let me now turn the conference over to Mr. Massimo Gianolli, CEO of Generalfinance. Mr. Gianolli, you have the floor. Good morning to you. Thank you very much. Thank you all. You can follow the presentation starting from slide number five, where we present a growth of our turnover of 34%. If we compare it to the CAGR of our business plan, it's almost double because our forecasts were a growth of 18%. Our turnover is EUR 1.8 billion, and we exceeded the CAGR of the time span between 2021 and 2024. If you remember, that was an outstanding timeframe for our growth already. Let's move on to the next slide. You see we are highly diversified, and we always shed risk. We, of course, want to focus on growth, increasing the number of assigned debtors, and the relationship between seller and assigned debtors. You can see that we do 10 times what the market does, 60 assigned debtors per sellers versus the market that does six debtors per seller. That means we have a higher diversification and better risk diversification. If we compare data up until the end of May, because Assifact only provides data until the end of May, you see the turnover growth provided by Assifact concerning the market is 1%, and instead, Generalfinance recorded 34%. Let's move on to page 7. That's net income growth. We are up 54%, so we tripled the expected growth, the growth we disclosed in our business plan. It's EUR 12.3 million worth of net income versus EUR 8 million last year in the first six months of the year. You will be able to appreciate how growth and efficiency is much higher than the turnover volume itself. That is very important, and it's also very interesting. Let's move to page 9, and we can reconfirm that our model, Generalfinance's model, is a low-risk model with best-in-class asset quality. You saw risk is the same as the one we had in the first half of 2024, 0.14%, and a gross NPE ratio that is very close to the first six months of 2024, 1.75%, versus 1.94% in the first half of 2025. We are 1/3 less. Well, NPE ratio is 1/3 of the NPE ratio provided by the system average by the market. Let's now move on to the next page. Our assets work as buffers, as parachutes, so we have a credit insurance. We have SACE credit insurance, and we have a policy we have with Allianz. On the recourse, we have EUR 133 million outstanding, not advanced. It's money that is then returned to the customer and that can be offset with unpaid. We have EUR 123 million insurance coverage. We have EUR 147 million bank guarantees or personal guarantees, or funds from companies that play a role in our company, that are part of our company. You see that the actual risk is reduced by 1/3 to 1/3 versus the outstanding credit. If you move to page 11, you'll see payment condition, DSOs, days of sales outstanding. From the very beginning, we have always shown a constant reduction of DSOs up until two years ago, and then a stepwise growth. Well, in 2025, as we said last year, we've landed to a selection of the seller and debtor mix. Our DSO is fully in line with that of the market, as you can see on the right-hand side of the slide. On the left-hand side, here too, you see we have some clients, some that have a longer payment conditions or payment delays. That led us to have a 16% of credits paid within 30 days. We even got to 6%, 7%, or even less, having almost 93% of payments on maturity. Still, 82% of the credits are cashed in on their natural maturity, and then a very small amount in following days. On page 12, you see how our DSO is trending, starting from Q2 2023 until now, and now it's 83 days. You see in May, the average DSO was practically 82 days. That is indeed an excellent result that has an impact on our P&L and our bottom line, so to say, which we have had the opportunity to appreciate lately. On page 13, I'm sure you're very familiar with our business model. It's one-of-a-kind business model. Look at the central part of the slide, the breakdown of our turnover on the assigned debtors side and then the seller side as well. As you can see, we can focus on the right-hand side of the slide, which highlights Generalfinance's growth was driven by client acquisition. We have 100 rolling clients, more than we had last year. It's 30-40 units or clients per month additional. Bottom right, you see that about 50% of our activities is distressed and new, but the performing part is also growing about 50%-53%. We have a stronger demand coming from the market because, of course, there are a number of issues that were to be encountered in the industry for special banks or for two players who in the market had some problems, who are dealing with distressed companies. They opened up the market for new clients to migrate to us, and therefore to increase our portfolio. Page 14, you see again the usual slide. Look at the number of transaction, almost 700,000 in the last few months. Sellers are up 39 units quarter-on-quarter. The number of assigned debtors, it's about 21,000 assigned debtors. All of the processes, of course, are running on our own proprietary digital platform, and that is of paramount importance. We have people who deal with the full development of back-end, our historical TOR back-end. We have a front-end side, which is GeneralWeb. It's the platform through which clients dispose of their or sell their portfolio. We have the click part, which was developed and can draw from a very powerful data lake for our database. We have all transactions starting from the 1990s, so we have a huge amount of transactions to draw from, and that enable us to have very far-reaching analysis capability and very far-reaching historical data sets. One more slide, before I turn it over to our CFO, will tell us about our P&L and some funding transactions ongoing, the ones we engaged in in the past, and then, of course, other activities that we have underway. This is Ugo Colombo speaking. We are on page 16. Good morning to all of you. As always, you find a summary of our P&L in the top part of the slide. More specifically, let's have a look at our top line, which is very good. Interest margin is up 44%, and it's speeding up strongly versus last year, which was 27%. Commissions are up 44%, again, as accelerating versus the first quarter. The net banking income is up 44% versus 39% in the previous quarter. The most important piece of information is indeed the line of provisions. It's flat Q1, Q4. There were EUR 1.9 million in the first quarter, and it's EUR 2 million now. As we had said in the previous quarter, the proactive activities we have been running of positions of items between Stage 2 and Stage 3 has enabled us to optimize cost of risk that is back to the 2014 level, with ratios that are all under control. We have more details for non-recurring items that have driven the growth. Central part is loan-to-value. The turnover on disbursed amount, and here again, it's very conservative, especially on the recourse factoring. We have a 75% loan-to-value. It's probably an all-time low for the last four years, and that really tells you how conservative our lending policies are. We have EUR 130 million worth of buffer that we can find on the recourse portfolio, which is a very interesting and very important buffer to shed risk. Pricing, we've talked about this in the past. The interest margin went from 9.6% in 2021 to 8.5% in 2023. There's been a backtracking, a retracing, and it's 9.8%, so better than 2020. It's the all-in return of our portfolio, and even better than the last two years, 2023 and 2024. The breakdown is always in favor of services and credit management. Interest managing and net banking income is about 25%. That's the ratio. 24% and something at the end of versus 75%, which is driven by the provision of services with high added value. We further consolidated our efficiency. We've maximized our efficiency thanks to our investment platform. As we have seen in the previous slides, cost income is down to 32%, even better than the 2024 figure, and improving versus the first half of 2024. Three percentage point better in the cost-income ratio. That really keeps us along the lines of the efficiency targets we provided in our business plan. Our ROE is also improving, EUR seven million income, and return on equity is lumped at 35%, very much in line with the 2024 figures. Balance sheet, there are no major differences to highlight. Financial assets are mainly the loans disbursed versus the invoices purchased. We have a volume effect. We go from EUR 530 million-more than EUR 615 million. Otherwise, you have cash and cash equivalents, sight deposits, money that is waiting to be invested in our core business. Shareholders' equity is in excess of EUR 80 million, including our profit. The funding is EUR 600 million. We have more details in the following slides. Page 17, let's focus on the bottom of the page, which focuses on the capital ratios. CET1 goes from 14.8%-14% due to volume effects. We increased our turnover volume and our credit stock vis-à-vis clients. Our RWA density between EUR 530 million total RWA versus EUR 740 million of our assets, total assets, is flat at 71%. That's our RWA density. We benefit from the Article 106 status. The minimum CET1 ratio is 4.5%. That's the requirement as per European regulatory. It's Article 106 in Italy. As to total capital ratio, it includes the T2 issuance in the previous years. It's at 15% with a 7% buffer, which going forward is an excellent buffer to enable us to be very flexible in our financial operations and to provide an even stronger growth trend vis-à-vis our business plan. On page 18, you see a snapshot of our funding. It's mainly floating rate instruments. Cost of funding was 4.2% in this quarter with a spread vis-à-vis versus the Euribor six, three months of about 200 basis points. It's a weighted average of all different funding instruments we use. The revolving, the RCF facility, which accounts for the biggest share, and it was renewed in 2024, as we'd already said in the first quarter. We drew EUR 260 million with the securitization, second big chunk, and drawn for about EUR 90 million. If you look at the total available funding that has been growing stronger during the first six months, we exceeded EUR 1 billion of available funding for the first time. In the first half, we issued the first senior unsecured bond that was placed in the market worth EUR 50 million. That was the first debt capital market transaction that Generalfinance engaged in. We made an agreement with the Cassa Depositi e Prestiti for the initial amount of EUR 7.5 million that will grow up to a maximum amount of EUR 25 million. EUR 72 million is the liquidity available. We have a counterbalancing amount which is around EUR 400 million. That's our counterbalancing capacity, so that our liquidity profile is very sound and very consistent with the growth objectives that are included in our business plan. If we move on to page 19, we see the trend of our net interest margin. As we said before, talking about the trend of our interest income, we see an opening of the range versus 2022 and 2023. Also year-on-year, we went up about 10 basis points. It's still from a pricing perspective. It means we are very good at pricing cost of risk and then showing a net interest margin that is growing versus the previous quarters. Same applies to commissions that account for a large portion of our income, and about 76%. We're up 20 basis points on commission income thanks to our ability to apply a pricing that is tied in with the rolling out of the disbursement file. These practices have been applied over the first six months. We have commission expenses, the commission we pay on the insurance portion of our turnover. If we refer to the latest transaction, it's the costs of the SACE guarantees, but commission expense on turnover is about 20 basis points consistently. One last page before I hand it over to our CEO. Its costs are up 30%. If you look at the breakdown at the bottom of the page for the individual line items, you see personnel costs are up 13.3%. We've increased our personnel from 72 to 81. Well, our head count from 73 to 81, because we are pursuing our growth plans, and we want to increase and maximize competencies and skills. That is the reason why we had an increase in year-on-year costs. We've defined the different items that explain the different items. On page 21, you see the different items. At the bottom of the page you see the first one is tax credit. This is something that we have increased versus the very low volumes we recorded in 2024 because tax credits, VAT credits and the so-called Superbonus, that of course produced costs for the transaction itself and for the due diligence process, and they were accounted for in cash for about EUR 400,000 in the first half. These are business-related costs, where the interest margin will be recorded in the following quarters. The duration is six-12 months. You have a lag between the actual transaction costs and the margins that you are producing in the following months. We have one-off costs that expansion, for instance, abroad, that were accounted for in the first half for about EUR 600,000. Marketing expenses and that of course, are a plus, are added to what happened last year. EUR 1 million, that's the EUR 1.4 million explained in a nutshell. It's strategic initiatives that generated those costs. Of course, the outcome of those initiatives will be felt, the impact will be felt in the following months. For instance, for the opening of one branch in Switzerland or and for Spain instead, we will be recording a stronger activity. Net of these non-recurring costs that are higher than last year, but generally speaking, without the one-off costs, the cost increase would have been 15% and not 30%, and that would have been in line with our corporate practice. Let me hand it over to our CEO. Thank you very much. Ugo, we are on page 23. We have two new slides in addition to the usual ones because at the end of July, we had to solve a problem, an issue that had to deal with the ruling of the Court of Trento, ordering us to pay EUR 9.3 million to the company, to the assignee of debtors' assets and liabilities, in addition to interest and expense. As we thought, or we deemed that ruling a wrongful one, a wrong one, we appealed with the court. The Court itself stayed the execution of the ruling, and so the amount had been deposited with the named bank. The Court of Appeal deemed our appeal grounded, reasonable, and so there will be a hearing at the beginning of December. This is a positive fact that enabled us to, of course, show you a very clear situation. The reason for which we postpone the approval of the first half results, it was that we were confident that the problem was going to be solved before the disclosing of the results. We have other clawback actions. It's three lawsuits, this one and two more, for a total amount of EUR 7 million, with a claimed amount of EUR 2.2 million classified as possible risk. It's a suit we've already won in the first-degree ruling. There's another amount of EUR 4.7 million that is classified as remote risk. On page 24, you can see from 2007 until today, the events that have characterized clawback vis-à-vis Generalfinance. From 2007-2025, we've taken a very big timeframe. Only seven lawsuits. One we won, legal proceedings, and one we lost, two we settled, and three are ongoing, are the ones that I have just described. Over that timeframe, we have developed about EUR 15 billion worth of turnover. If we look at the loss rate on turnover, it would be equal to 0.02%. Among these proceedings, and was with Crevit. One of those was settled very close to our IPO. Even that legal proceeding was EUR 2.2 million. Even then, the risk was considered to be remote. Even if we were to analyze all this together, we would still have a confirmation that our business model that is focused on principles that are very strong. With three rulings of the Court of Cassation, one of which was in 2024, and this is what the Court of Appeal of Trento referred to. I wanted to tell you about this because it was of pivotal importance. We have 36 years, a long-standing track record, and we wanted to give you an update and also give you a ratio between the legal proceedings and at the same time our turnover. Very few legal proceedings were filed against us. We go to page 25. We are very happy, very pleased with the results of the first six months of the year. We are confident we will close the year in a positive way. 44% net banking income, NPE below 2%, costs that are perfectly under control, and despite the current economic conditions. The macroeconomic conditions are favorable and will be favorable for Generalfinance. We have grown outside the Italian borders. We've opened the Madrid branch. It's up and running. The volumes are growing nicely. There are good growth opportunities there too. We opened an office in Rome that is followed by our Vice President, Paolo De Angelis. For a couple of months now, we could appreciate the business volume increase, business produced by or generated by our Rome office. We are waiting for the authorities to give us clearance to open in Switzerland, and we are confident we should be able to open by beginning of next year, next spring in Zurich. We are strengthening our internal functions, and that will contribute to the success of our business. Our funding structures enables us to really support growth and drive growth, and capital ratios really enable us, are tell-tale proof that our growth is outstanding, and we are going to keep it also for the coming years. The bottom line, the net profit, for which we gave guidance in the business plan, is reconfirmed, the net income for 2025. Here we are available for questions now. This is a Chorus collaborator. Let's start the Q&A session. Whoever wishes to ask a question, please press star and one on your phone. To be removed from the Q&A queue, you can press star and two on your phone keypad. Please ask your question using your headsets or handsets. If you want to ask a question, please press star and one now. The first question comes from the line of Irene Rossetto with Banca Akros. Please, madam. Good morning to all of you. I have a couple of questions. Thank you for your presentation. The ones are for the guidance for the net income for 2025, and you have reconfirmed it. Given the trends you have experienced in the first six months and in Q2, you could revise it maybe upward. Do you expect a slowing down in the second half of the year, or do you prefer to be conservative in your guidance as to the net income? Another question, could you give us a bit more color on the new business pipeline for the second half of the year, which as you hinted at, it's going to be very strong. Could you elaborate on it, please? Very well. Thank you very much for your questions. Indeed, our guidance is conservative. Data and growth in August is along the same lines or even more reassuring, if I may say so. As always, we like to be cautious. We like to be conservative because events may turn, you may happen to have a negative event. We can maybe think that our growth could slow down. As of today, well, in Q3, it will probably easier to either reconfirm our guidance or revise it. I can confirm that we have been conservative in our guidance. We see that from the number of clients, the growth in our turnover. Over the last nine months, it's hundreds, 100 new clients. It's a very sound growth, and it's widespread. It's not we have our main customers that we had assumed to either lose or we had already assumed a strong decrease in business, but that didn't happen. The number of sellers is even higher, so the number of clients selling their invoices to us. That is positive indeed. The business that comes from the center and south of Italy, it's perfectly in line with our abilities and skills and competencies. That reconfirms that our decisions to open up low-cost branches, offices. Let me remind you, we always say low-cost offices because we have temporary offices, just like Regus-like offices. We can have different spaces on demand. We have one or two people in the office working in an ideal way to have low costs and maximize efficiency. The same will apply to Zurich. Our Madrid offices and Rome offices are already giving excellent results, good results. Well, because it's a model that is starting. It has a central part that is the Biella offices, and then we have an outer part that is our external offices, without having too much weight on the central organization, because they're very lean and very efficient. It's more arrows to be fired to improve, to be launched, to improve our results going forward. Thank you very much. Thank you. Next question comes from the line of Simonetta Chiriotti with Mediobanca. Go ahead, madam. Good morning. I have a question. If you could give us more details, could you tell us about the contribution the Spanish branch is giving to the overall turnover? Second question, you mentioned that macroeconomic conditions and competition are beneficial for your growth. Could you elaborate on that? Could you give us more color on that point? Thank you. Simonetta, as to Spain, it's Mr. Colombo speaking, the CFO. In the first quarter, we had the first factoring contracts, about EUR 20 million. That's the contribution, roughly, out of EUR 1.8 billion of turnover recorded in the first half of the year. In the previous quarter, we expected a potential business flow of a few hundred thousands of euros. Probably you remember that the business plan is based on very conservative assumptions to record around EUR 300 million worth of turnover in Spain from now to 2027, with a first-year target around EUR 100 million. If you consider the pipeline, which is still robust, and how new business opportunities are generated, so the network is still showing an interest for special situations. We believe that about EUR 100 million for the current year is within reach. EUR 3.3 billion worth of targets. In the very short term, the contribution is not going to be so relevant, but it will be a different story starting from 2026, 2027. Very well. Let me add, Mr. Gianolli speaking. We are also aware that there's an interest for the market, and as to the pricing model, the number of sellers, and the ratio sellers assigned debtors, we really could pick and select, and adopt a very conservative approach indeed. It's not that we want to go to Spain and be there and then lose money and run away. No. We've been working for months to really fine-tune documentation, our operating setup, and we have found a market that is very similar to the Italian one. Same thing applies for central Italy. We've always been there. We've always been active there, too. It's not that we embarked on a new adventure. It's being there on the spot, being there in Rome with a colleague who comes from a competitor, really is somehow facilitating a pathway, even for geographies that were marginal in the past. Companies, of course, macroeconomic conditions, companies need to take action, and the banking system, well, loans in the banking system. Please remember that we deal with the 50% of companies that have ratings, that are restructuring their debt or have low debt rating, that it's companies that are not appealing to the banking system for a number of reasons. Of course, the turmoil that affected our business, and more specifically, for instance, Banca Progetto, that stopped their growth in factoring. That part of the business, performing SME factoring, was automatically shifted towards us, because we somehow are the recognized market leader, so we could acquire new clients, customers. The very same transactions that Ifis and Illimity somehow distracted the attention of Illimity's focus on those clients that are close to our core business, and that found themselves to see us as a reliable partner. Our distinctive feature is that we are consistent. We've been in the market for 42 years now, and we are constantly there. We have a constant franchise in the market, and that enables us to seize also that kind of opportunities. It's a number of different situations that have come together, also because maybe other public players, for what happened in the market, we managed to grow. We talked about due diligence, costs for tax credits, and we've grown in that area too. That was an area that we were providing as service to the companies that work with us, for instance, the processing of VAT credits. That doesn't mean we are changing our core business. It simply means that we are adding ancillary or service activities to our core business, even more so against the backdrop like the one I've just described. Is that enough? Does that answer your question? Otherwise, I'm here ready to elaborate. Thank you very much. It's okay. Next question comes from the line of Davide Rimini with Intesa Sanpaolo. Go ahead, sir. Good morning. Thank you for the presentation. Congratulations on your results. I have a follow-up question. First one concerning the guidance you gave us. Given the comments you've already made with respect to the fact that you were very conservative in your guidance, could you also confirm a certain seasonality in your business in the first and second half of the year? Where turnover is mainly concentrated in the second half of the year versus the first half, do you see a seasonality there? Another follow-up. A specific focus in Q1, you mainly focus more on retail business. Could you elaborate on that? Give us more flavor, more color to it. Another, could you say if you confirm the targets you gave in your 2025-2027 business plan, you'd given a number of KPIs in that plan, NPE ratio, for instance. I was wondering, you gave a target for 2027, which was 2%. Is that target confirmed? Thank you. Let's start from second half. Yes, we can reconfirm the guidance we gave for the second half. Normally the second half of the year is very similar to the first one performance-wise. The performance is very much depending on, for instance, the activities that are in July or year-end for a number of reasons, because of course, you pay the 13th month, in December you close the business year, and also there are one-off transactions taking place in December. As of today, the growth trajectory is the same or even improving versus guidance. Definitely we can confirm that. On the retail side, as you know, we decided, once we got out of the Workinvoice transaction, we decided to generate, to insource somehow, to create a retail department. We are looking into creating a retail division because somehow, as you see, the number of sellers that is growing, and therefore we want to maximize efficiency of our internal operating model to have a division devoted to corporates under special situation. An SME division, more automated criteria versus special situations. You have to bear in mind that our roots, our origins has always been a focus on SMEs. This is what we will keep on voting, but it's more of an organizational issues that will start showing an impact starting from 2026, I will say. We're not going to limit growth, we're not going to cut growth because that's very important. A small client normally takes up more time than a large customer, but small clients normally generate more NPEs than large customers. If we compare the performing world with the distressed world, in the distressed world, the fraud risk is almost equal to 0, whilst in the performing world, there's a much higher risk for frauds. That's why you need to be very conservative, both in the type of clients we take in and the process we have to apply, because we take in those clients so that we don't confirm those 2.2% you said, and I would like that to be lower, that 2.2% you mentioned. Here again, we want to be very cautious because EUR 3.5 billion-EUR 3.6 billion is a lot of money, a lot of transactions, 700,000 transactions rolling. Despite the fact that we are experienced, that we are skilled, the 36 years in the same industry do make a difference. One still can make mistake or somehow engage in transactions that may cause problems. I can confirm, I do confirm our trajectory from here to 2027, but also we always work to do better than what we give guidance for. The first one to look at himself in the mirror is myself. We always try and be all happy and work according to a way that has enabled us to grow in a healthy way with a forward-looking approach. Thank you. Let me remind you that if you want to ask a question, you may press star and one on your phone. For further questions, please press star and one on your phone. Mr. Gianolli, there are no more questions in the queue for the time being. Very well. Let me take this opportunity to thank all of you. We'll talk very soon, at the end of October. Thank you so much for joining us today. Have a good day and good work today.