Good morning. This is the Chorus Call operator. Welcome to Generalfinance's conference call presenting Q1 2026 results. Let me remind you that all participants are in listen-only mode, that the presentation will be followed by a Q&A session. The presentation can be downloaded from the site, www.generalfinance.it. To be assisted by an operator during the conference call, press star and zero on your phone keypad. Let me now turn the conference over to Mr. Massimo Gianolli, CEO of Generalfinance. Mr. Gianolli, please go ahead.
Very well. Thank you very much. Good morning to all of you. As always, I'll be following the presentation. We start from page five, that is an overview, an updated overview of our shareholder base and the relevant voting rights.
There's no main difference versus the previous shareholding base. If you move on to page five, you see our turnover, which is slightly higher than 10%. In the first quarter, our turnover landed at EUR 905 million, which is in line with our expectations, especially if we consider the seasonality of Q1, and more specifically of the very special Q1 we had in 2025, during which we had one-off transactions that had affected, that had boosted the first quarter of last year. On the following page, we are on page seven of the presentation, you see on the top of the slide, you see a comparison with the average data, that is to say, the average number of debtors per seller.
Generalfinance vis-à-vis the market, we are 10 times higher than the market there. For every seller, normally there are six debtors, we have instead 56 debtors per seller on average. We are focusing on diversification, we always want to provide a full outsourced service. We are very focused on managing our sellers' full portfolio wherever possible. The turnover again, we recorded a 10.5% growth versus a 0.4% of the market. Our net profit, net inc similar to that of last year for the reasons I mentioned and for other reasons that I will mention as we move through the presentation and when I will give the floor to our CFO, Mr. Ugo Colombo. Anyway, it's the growth is within expectations.
We move to page 10, where we see that cost of risk is fully under our control. It was 0.3% in the Q3 2025. We closed full year 2025 at 0.10%. Now we land at 0.20%. Always very low cost of risk. Our NPE ratio is somehow being affected. It has a swinging trend for different reasons, one of which being volatility and being derived by the applications. You see it's half of the market average, as you see on the right-hand side of the slide. On page 11, you can see a breakdown of the so-called parachutes. We call them buffers or parachutes. It's our financial assets. Of a year-end, we're EUR 174. We have EUR 76 million worth of insurance policies.
Financial assets were EUR 584.76 insurance, EUR 152 outstanding and not advanced. We have a very limited amount of advances on recourse factoring, EUR 75.76. It's the amount of loans that were not advanced. Then we have personal guarantees issued by the persons or the entities that we disburse loans to. This is to really protect our clients. You see then we have net financial assets. We have the real risk falling to EUR 173 million. On the next page, we see DSOs. In the previous quarter, we'd already said that it's been growing over the last 18 months. If you remember, in 2024 and part of 2025, we had a DSO that was slightly shorter than that of the market.
Today, well, nowadays, we are fully aligned with the average market DSO. The main thing, and we're still on page 12, you see the performance of our collections is very positive, despite having greater turmoils in the market in the first quarter of 2020. It also factors in that there are clients in particular product classes that led to the increase of DSO payment conditions. Everything is under control and planned. 70% of our maturities is paid on the natural expiration date, and 20% in the following 30 days. Between 30, 60, 70 days, we collect the rest of our dues. You see the breakdown of DSO. On page 14, we see a slide that I always show you, and it's very interesting to look at it anyway.
The central part or the bottom of the central part of the slide, you see we, of course, we turn to sellers who are in a turnaround situation or in a restructuring procedure. They are weak. It's weak corporates going through a complex time frame. The central part, you see the scores that we get about our sellers. 59% of our sellers have a yellow score, but also about 38% of our sellers have a green score. On the bottom right of the slide, you see 50%, as we'd already said in the previous quarter, 50% of our operations are in as performing customers and loans, and that is good news.
Meaning that, it's a very big chunk of the market, and you will see by the number of our clients, the growth is being supported by them and also by the fact that we have a deeply rooted operation, and we've been focusing on that. We've been active in the business for over 40 years. The central part of the slide, the top part of the center of the slide, you see the assigned debtors, and you see the different colors of the pie, but not in a very marked way. They give us very interesting scores, and that again proves that we are outsourcers, and we manage the full portfolio of our clients.
This is a distinctive feature of Generalfinance versus or vis-à-vis the market, because we can collect receivables also on the yellow score, also red and black. We still collect receivables, and even the assigned debtors become sellers. We have the ones with a negative color. The recourse factoring is still has the lion's share, 78% of our turnover. The non-recourse factoring accounts for 22%, and it's exactly the opposite of what the market shows, where Assifact says that non-recourse is a much higher percentage. On page 15, you see the number of rolling transactions, 755,000 in the last 12 months. Also, the number of sellers is increasing.
Not only are we we're not losing sellers, but we've increased by 12 units in the first three months of the year. In April and first days of May, we further increased the number of active of performing customers, we therefore could check that our business plan is sound and that the turnover and the disbursed amount vis-à-vis the plan. The number of assigned sellers, debtors, sorry, is roughly the same number, so highly diversified. We have 493,000 invoices that were managed and 541,000 installments. That is very meaningful considering the FTE, about 90 people within Generalfinance dealing with this big workload, and I like to underline that. Let's have a look at the results balance sheet and income statement.
I'll hand it over to our CFO, and then I'll get back to you.
Good morning to all of you. We are on page 17 of the presentation, our P&L specifically. We start at the top part of the table. Let's have a look at our top line, as accounted for in the P&L. It's a very favorable performance. Interest margin is growing 13% year on year. We benefit from the volume effect, and we expect an increase of average volume of loans of 10%. That of course has an impact on our NII.
Year on year will also have a favorable effect when it comes to the trade or commercial spread, about EUR 0.10 increase that plays a role in perfectly balancing assets and liabilities and of course, accounts for the 13% increase in our NII. Commissions. Commissions are up 1%, and there we see a positive volume effect, about 10% increase, just aligned with the turnover increase. A negative impact of pricing. As our CEO was saying, the pricing effect over 2025 had been connected to high profit transactions that on our portfolios that had somehow had a very positive impact on commissions. So putting these two things together, they offset one another.
We get to 1% pricing performance, and that is in line with budget expectations over the next quarters. We have this special effect coming from these very special transaction will be diluted over 2026. Always talking about the P&L, a favorable performance and trend when it comes to cost of risk going down 30%. Last year, the cost of risk had been negatively affected by a very special asset class. If you remember, we're talking about future loans, about EUR 1 million negative effects. That is no longer impacting 2026. In 2026, it was due to policy adjustments.
EUR 1.4 million cost of risk in 2024 was partly tied in with UTP items, UTP-related items with a debtors portfolio that are still performing, they are still paying, and therefore should lead to a reversal over the next quarters, the coming quarters. As to costs, up 19%. There's a table on costs, you can look at it in the annexes. As to the net income performance, the tax rate topic from the Italian Budget Law in 2026 led to an increase of IRAP, of IRAP tax rate of 2 percentage points, also interest payables, 96%, again, the rate. That led to a 4 percentage points of our tax rate from 33% for 2025 to 37% roughly in Q1 2026.
That's the increase in tax rates. That, of course, led to the relevant impact on negative impact on our P&L. Page 19, just to give you a few more details on our capital structure, on our capital ratios. In the first quarter, factoring tends to be softer than the rest. That leads to a mechanical reduction of RWAs and therefore, capital ratios go up about 100 basis points versus year-end 2025. CET1 goes from 13.1%- 14.1%, always on the slide. Reconfirming our capital soundness, we are 10 points almost higher than the requirements, that is 4.5%. We have TCR that went up about 20 percentage points.
TCR benefits from the issuance of the subordinated loan placed with institutional investors in October 2025, EUR 30 million. That was the amount. Benefiting from very favorable market conditions that were granted at the end of 2025, and therefore led us to actually speed up that placement that was due in 2027. There's a stable relationship between capital and our RWA. 74% versus 72% in the previous quarter in same quarter in 2025. We have a different mix between corporate portfolio and retail portfolio, but we're still in line with the guidance we provided in our business plan. On page 20, let's talk about funding, the available funding.
At the bottom part of the Available funding is up EUR 2 billion from EUR 1.1 billion in the previous quarter, and more specifically, in the first quarter 2026, we increased available funding through a securitization program, through the end entry of access of a new bank, about EUR 80 million. In the bond line, we have another placement of EUR 20 million. Senior unsecured bonds were placed, leading to EUR 143 million total bonds placed in the market. Other funding items are flat or stable versus the previous quarter. The increase of total funding, available funding and the use versus the peak we had in 2025.
We have a further increase in our counterbalancing capacity, about EUR 500 million and EUR 655 million, further reinforcing our funding structure vis-à-vis the financial markets, and taking into account the need we have to increase our funding to support our growth going forward. Funding is all variable rate, floating rate, also considering the interest rate swap transaction on the bond component of our portfolio. 94% of our funding is the floating rate, variable rate. Then we have ALM, and assets. If we consider everything, it's almost all variable rate.
We have a different mix, in, for instance, in the bond placement that is fully accounted for in Q1 2026, especially senior and subordinated loans that have a cost that is increasing and higher than collateralized funding that had mainly characterized our funding set up in the previous quarter. Let's now move on to page 23, a few cost details. As I said before, overall costs are up 19% year-on-year, and overall, we mainly record an increase of 40% of personnel cost, EUR 900,000 personnel expenses. If we further break it down, half of the personnel is due to LTIs, long-term incentive plans, more specifically, phantom shares realigned at fair value quarter-on-quarter.
The share price appreciation led to a one-off cost increase that will be offset when shares will be physically handed over. Especially in the first part of the second quarter, there wasn't such a high and more marked share price increase. That's one part. If we then, of course, have another one-off, meaning agreements with personnel, it turns out to be fully in line with our historical average. Top right, you see up, this up 19% meant FTE growth and, of course, increasing personnel during the quarter. Let me hand it over to our CEO again for a summary.
For closing remind, let's say that the market backdrop and market turmoils and whatever is happening in the market, well, what has happened in the markets between 2020 and now is getting worse. From our perspective, market turmoil and the market weaknesses, of course, affect the lending to corporates both in Italy and abroad. There's a growth only in corporate lending to corporates with only corporates that have excellent ratings for the rest of the market, Italian SMEs or even in the Spanish market, there's a shrinking of loans to corporates and therefore, our portfolio is therefore growing. We have an excellent pipeline for Italian corporates and also for Spanish corporates. We started opening our offices in Switzerland. We'll give you more details.
There too, in Switzerland too, we are seeing that there's a lot of interest shown by players. We're meeting them in Lugano, Zurich, in Switzerland. That again is making us confident for the future. Our TCR, total capital ratio, is very meaningful and enables us to support our growth and also a stronger future growth as we witnessed last year for all the reasons we've already mentioned. All of these items and factors cannot but make us reconfirm our guidance of in excess of EUR 32 million of net income for 2026. I think I can wrap up here, and we're ready for questions.
This is the Chorus Call operator. We're now starting the Q&A session. If you want to ask a question, please press star and one on your phone keypad. To be removed from the Q&A, press star and two on your phone keypad. Please ask your question using your phone handsets. Press star and one if you want to ask a question now. First question comes from the line of Irene Rossetto with Banca Akros. Please, madam.
Good morning to all of you. Thank you very much for the presentation. I have a couple of questions. Could you please elaborate on what you are seeing among your counterparties against this market backdrop? The feedback we had from traditional, mainstream bank is that it's still too early to judge what will happen. Could you give us an update on your initiatives abroad? You mentioned Spain and Switzerland. Could you elaborate with more color?
Okay. As to the market conditions and counterparties and feedback, as to the sellers, indeed, the sellers overall expressed, well, talked about a lack of growth, they have a decrease in their turnover. What we are witnessing, it's also a small pickup curve, a small recovery curve. That is meaningful. As to the assigned debtors and therefore collection and payments, there are some. Well, we've seen some more difficulties and some bigger delays. Nothing major, so to say. We've underlined several times that creation has been in place ever since 2020. The test we had during COVID years in 2020 and 2021 really proved that even assigned debtors and the relationship between sellers and assigned debtors is very flexible, very resilient as a relationship.
That's very important for us in our business. There's no particularly negative factor that we can underline. As to our presence in the Gulf area, we have a very marginal presence, so we have some supplies being sent to Iraq, but it's Eni paying, so it's the Italian state paying. There might be delays due to the fact that they have to download goods from ships and put it on trucks. We have about EUR 2 million worth of receivables in Oman, for instance, and the United Arab Emirates, but we are not experiencing any major issue there. Exactly as it happened during COVID, sometimes the assigned debtors need refinancing, so we have sellers and or assigned debtors, but it's one-off somehow.
Spain achieved EUR 55 million worth of turnover, that is indeed interesting. We have a larger number of clients and 12 now, we have a number of corporates in our pipeline. We went to a conference on factoring, this year, marketing and communication have played a major role. We took our conference to an international stage, so to say, We first had a meeting in Rome and then in Switzerland and Spain. The conference, this roadshow, conference roadshow was very successful, local actors and players were very interested, it was very successful. Spain this year really is being a satisfactory country for us, as we were expecting.
We said in 2025, of course, the start was much slower than we expected because the first transaction we managed to complete was in April. Of course, it took time. Starting from the end of March, we launched the multi-language web platform that has a big advantage. It was presented during the factoring conference in Madrid, and it enabled us to speed up the relationship with sellers, but also the platform enabled us to simplify the uploading of all the companies we have in the pipeline. That was very important. On Switzerland, we've already identified the headquarters. They will be in Zurich. We've already confirmed offices. We've identified the two new colleagues who were hired for the Zurich offices.
We've had meetings with the Bank of Italy to get the necessary clearance, and we will be filing by end of June our official request with the Bank of Italy, and hopefully, we should have an answer by July. We are somehow laying the foundations to then formally file the request with the Bank of Italy. Informally, we've already had a talk with them. The Swiss model will be similar to the Spanish one, so we will open a branch. A lightweight and lean model with two colleagues, one office, and again, it's a Regus building, so costs are very low. From the first meetings we had, and with my team, I've been to Switzerland three times already, and we witnessed the same interest we had in Spain.
On the number of potentially defaulting companies from the Allianz Trade data, it's much higher than the distressed companies or possible defaults we found in Spain. We have 13,000 Italian companies who could default between 2025 and 2027, and we have about 6,000 companies in Spain and about 11,000 in Switzerland. That is really a one-of-a-kind situation. If we consider the size of the market, it's a very, very interesting and appealing market indeed. Ugo, our CFO, would you like to add something?
I can add that as it always happens when there are difficulties, when the market is undergoing there are macroeconomic difficulties affecting the companies, of course. We end up having opportunities to help those companies who somehow try and find agreements with debtors.
There are tools that can be used when we have witnessed over the last few months. Interest rate spikes, as we've noticed, and the USA-Iran war affecting 60, 70 basis points, as far as when the interest rates are affected, and then a reduction of turnovers for companies. Overall, we can say, but it's somehow a historical fact we've seen over the last 10 years that net net generates a positive impact on our operations, corporate operations. Thank you.
Next question comes from the line of Simonetta Chiriotti with Mediobanca. Go ahead, madam.
Good morning. I have a question on your clients, sellers, and debtors. They have been growing. Sellers are growing, and assigned debtors are decreasing, as far as I understand.
Could you elaborate on this trend and give us some color on what is happening in your customer base? Another question as to DSO. Looking at the slide on page 13, it's slightly lower than last year or versus the first quarter of 2025. Is this a temporary situation? Do you see this becoming a trend going forward? Thank you.
Thank you very much. As to the sellers, they are growing, and they keep growing. That's the trend we've witnessed also over the last few weeks. The number of sellers is growing. We should achieve more than 400 sellers shortly. The first quarter is always a bit anomalous, a bit different, because on January 1st, everything is starting with delays.
The first month, turnover grows very little, the number of sellers are also not very many. The real quarter, the first real quarter for us is between April and June, where the machine is nicely oiled, and it starts performing in full swing, so to say. That's interesting. Number of assigned debtors is declining, 21,000 and something. It's not 300 or 400 assigned debtors that make a difference. In our credit committee last Wednesday, we had 860 master data for assigned debtors for one single seller. There, there are always swings when it comes to assigned debtors. It depends on the seller we are acquiring as a customer.
If they have supplies for an oil pipeline or a natural gas pipeline, you have two or three sellers in that area. Makes a big difference. If you instead acquire a seller who is selling, I don't know, who's an ironmonger or something, and you may have very many assigned debtors, but they are a different size. We have a different number already versus the slide on page 13. On page 13. It's not a trend, this one. It's just a movement that we have somehow taken a snapshot of. We have 85, 83, 81, 78 in Q1. These changes are due to the fact that maybe there we factor in transaction with a longer DSO.
Generally speaking, we, for instance, did not include some items that were typical of last year that led to an increase in DSO. Today, our DSO will probably stabilize around 80 days, according to me. Could be slightly higher than 80 days. Maybe within a few days. There are no constant trends as to the shrinking of DSOs for the reasons I mentioned today. That is to say, we're looking for sellers in the product areas that normally have a longer DSOs than the ones we were more available in or present in 2024.
Next question comes from the line, Davide Rimini with Intesa Sanpaolo. Please, sir, go ahead.
Thank you very much. Thank you for your presentation. I only have a couple of questions. The first one is about pricing.
You mentioned pricing and first quarter in 2025 being very challenging. Could you elaborate on the fact that the situation is already improving in the current quarter. Connected to this question, you just reminded us how seasonally weakest for you. I was wondering, based on the results you have shown, you have achieved in Q1 EUR 4.5 billion worth of turnover for the full year. Do you think it's still a reasonable estimate?
First question. Well, this is the CFO answering. As to the pricing, Mr. Colombo, it had been discounted in the original business plan estimates and the budget for the current year. We were expecting a slight reduction in pricing on the commission side and also NII to reflect a lower contribution from high margin transactions that in 2025, as I mentioned before.
As to the trend of the performance, what we notice between the end of first quarter and now, it's a trajectory, it's a performance that's in line with our expectations. The EUR 4.5 billion you mentioned before, they are confirmed in an implied way, if you wish, net income for the given the net income we are providing. 320 basis points are the spread on three months Euribor, the loans that are being disbursed. First three months and also in the following disbursements, it was confirmed. As to margins being commissions on turnover, we Of course, the competitive backdrop is helping when some of the players are no longer available in our factoring niche.
We could retain our pricing policies in line with our expectations. It's fully in line with our expectations, and the yearly trend is not tied in with special transaction. It's just a trend. As to the issued disbursed turnover, we confirm our guidance. We constantly check our figures. Our sellers, almost sellers, and 21 assigned debtors. Of course, these relationships are somehow tied with our lettera di inizio rapporto, the document we signed with them. It's based on figures that then we test weekly, and we can confirm that today already, assuming no more new sellers, and considering the fact that we're very conservative in considering losses, in considering a cut in turnover, losing one or more customers.
We run stress tests also on our biggest clients. Today, I can tell you that we are already in EUR 4.5 billion we disclosed in our business plan. It's likely that at the end of June, we could even have a better performance than what we have given guidance for. Today, it's still too early to say.
Second question is about the quality of the creditworthiness of your clients. The previous quarter had higher ratios. Could you elaborate on what you expect as cost of risk by year end?
This is the CFO answering Mr. Colombo. Davide, well, our expectations as to the overall cost of risk is EUR 4 million in line, if I understand correctly, first quarter is in line with what we projected in our business plan.
It's slightly increasing, growing versus the forecast with drawn up until February, especially for a couple of positions that moved, shifted to UTP, so they will have an impact on cost of risk in the following quarters. For the time being, we can confirm this EUR 4 million cost of risk for the full year. The quality of our debtors, I'm not talking about the sellers, not talking about the assigned debtors. Looking specifically at our expected losses for stage 1 and stage 2 position, the way stage 2 is performing versus stage 1 allows us to confirm a quality of our clients that is not different from what we had at the end of year last year.
One more question. As to your funding mix, the issuance of the bond you mentioned, EUR 150 million, if I'm not mistaken. Could you elaborate on any possible targets as to the contribution of issuances? Another question. EBA has re-released a new report on the Definition of Default. Do you have any comment on that regulatory part or factor?
As to bonds, we've completed our funding plan. Our target was to have unsecured funding available to cover our needs, our funding needs, and funding that cannot be collateralized. For specific transactions that are not that cannot be associated with secured instruments. Having this senior unsecured level is in line with our expectations. We want to retain our position.
Maturity date is April 2028, in 2027, we'll start thinking of refinancing and maybe further increase the funding depending on the needs we will have over the course of 2027 and also thinking ahead of 2028. So far, in 2026, we won't be doing anything special unless there's a specific favorable position when it comes to spreads. We wanted to have the capital flexibility to at least cover the business plan time horizon and maybe beyond that. As to definition of default, as you rightly said, the final report was published on the draft that was released for consultation about six months ago. That offers, of course, the full universe of definition of default.
As far as factoring is concerned, there's an element of flexibility that was expected, but also is part of how factoring companies interacted with the EBA, and that led to a greater flexibility, especially as far as non-recourse factoring is concerned. 30 days would be the expiration, but that 30 days can be increased up to 90 days, especially on non-recourse factoring, to trigger mechanisms that take cash from the debtor to the factor. If you have to deal with treasury offices of large corporates, especially for non-recourse factoring, it enables us to be flexible. If confirmed, it could give us some more room for maneuvering.
Even though non-recourse factoring is only about 25% of our full operations, so it's less meaningful for us, still, it's going in the direction of providing us with greater flexibility versus the stiffer and more stricter approach that was first taken.
Okay, thank you very much.
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 keypad. Mr. Gianolli, there are no more questions in the queue for the time being.
Well, thank you very much. Have a good day, and we'll talk again at the next quarter. Thank you very much and have a good day. Thanks for joining us.
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