Good afternoon. This is the Chorus call conference operator. Welcome, and thank you for joining the Banca IFIS First Quarter 2025 Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Frederik Geertman, Chief Executive Officer of Banca IFIS. Please go ahead, sir.
Thank you, madam, and good afternoon, everybody. Welcome to our First Quarter Results Call. I am joined today by our CFO, Roberto Ferrari, by our Investor Relator, Martino Da Rio, and by our newly appointed Deputy Chair, Rosalba Benedetto. As usual, I will try to go through the presentation in a relatively short time to leave some space for Q&A at the end. I would therefore take you straight to page four for the synthesis of the First Quarter Results. We are very pleased with the results of our first quarter.
We reported net income of EUR 47 million, driven by a strong performance of commercial banking and of the MPL business, reporting revenues at EUR 179 million, that's 7% Q-on-Q, despite the decreasing base rates environment, operating costs at EUR 98 million, that's - 9% Q-on-Q, reflecting effective cost control, and loan loss provision substantially flat, thanks to the underwriting approach that you know of us. We have a good contribution from structured finance and equity investments. That was EUR 12 million in the quarter versus EUR 2 million in the fourth quarter of 2024, confirming its recurrent contribution to revenues. It does not come in every quarter, but we now have a multi-year track record of good results in the structured finance and equity investment business. We are focused on reducing cost of funding, as we will discuss more in detail later after the repayment of the TLTRO.
Our average cost of funding was down 30 basis points Q-on-Q, and it is now at 3.5%. We have a very solid CET1 ratio in excess of 16.5%, which is widely above the 9% threshold, and we are very well positioned to face both a maybe slightly more volatile macro environment and also the potential integration of Illimity while maintaining an attractive dividend payout. The board has therefore proposed EUR 111.5 million total dividends in 2024. You will recall that EUR 63.1 million was already paid out on November 20th, so what remains is EUR 48.4 million, so that is EUR 0.92 per share that will be paid on the 21st of May. Page five, revenues. You see we mostly offset the effects of the rates environment relative to last year.
Revenues were EUR 179 million, - 3% year -on -year and plus 7% Q-on-Q, thanks to commercial banking revenues that were EUR 82 million in the fourth quarter of 2024, EUR 89 million in the first quarter of 2024, and this quarter we arrived at EUR 90 million. With good commercial performance and pricing discipline that we've continued, partially offsetting the rates effect and the contribution of structured finance equity investment that I just described. MPL revenues are a very solid EUR 81 million. They were EUR 81 million in the fourth quarter of 2024. They were EUR 74 million last year. A lot of focus on streamlining the recovery activity of the existing stocks, and we also report that we made some positive transactions on new MPL acquisitions, also with forward flow mechanisms, therefore securing continued MPL acquisitions in the coming quarter, and those were executed in the first quarter of 2025.
Non-core and G&S revenues at EUR 8 million. They were EUR 5 million Q-on-Q. They were EUR 22 million in the first quarter of 2024. That was, you may recall, slightly inflated by some one-offs, specifically the sale of an equity stake that came out of a bad loan. EUR 8 million this quarter. Commercial activities, we always give a bit of a picture on how the bank is doing on the commercial side phase six, factoring turnover is roughly in line with the market. It came out at EUR 3 billion. We keep a clear focus on profitability there. It would be quite easy to make higher turnover volumes by going on low value-added types of transactions, which we do not normally pursue.
The average spread in factoring in the first quarter was 3.56% on top of the base rate, so that would be an aggregate number that's significantly north of six, excluding commissions, which further increase the profitability of this segment. Leasing. You see that the market had quite a growth, whereas we are more or less in line with last year. What happened? The quarter was characterized by captive leasing companies of the large European automotive manufacturers offering some very attractive deals to reduce sale backlogs. We obviously don't participate in that type of activity, so we remain focused on premium luxury, on price discipline, and especially on underwriting with remarketing agreements in place, meaning we don't have a material exposure to the value of the underlying car. Equipment and technology leasing - 1%, so roughly in line with last year.
A little bit of delay in CapEx decisions we're seeing on the corporate side. We don't have any specific tax effects boosting the leasing volumes as we had in Q4, so that went away. Companies, in our opinion, are buying a bit of time. The market was slightly better because there was quite a contribution from large tickets linked to the PNRR, and that's a type of leasing that we don't do. You will recall we do mostly SMEs, therefore small tickets. The spread's very solid at 3.75% on top of the base rates. This could be either the IRS if it's fixed rates or Euribor three months. Page seven, the MPL business. The MPL business has performed very nicely. We have a solid EUR 101 million cash collection. You see that we are almost always stable above EUR 100 million real cash coming in per quarter.
Starting early 2024, we concentrated on the Revalia purchase and integration, and we gave a lot of time and attention in the last two quarters on streamlining the recovery activity on the existing stocks, right, with focus on extrajudicial activity. I note that starting from 2025, the cash collection and revenues figures that we give will include Revalia by default, so we will stop reporting the two separate numbers. It does not make sense anymore. The company is integrated, and therefore we give the combined number. You will see, it is not on the slide, but it is elsewhere in the results, that gross book value has decreased a bit because we sold some portfolio tails. Gross book values were down EUR 1.4 billion, but as you see, net book values were not. They were substantially stable, meaning that the collection was offset by new portfolio acquisitions. You should see this as good housekeeping.
We are selling tails of very low book value loans. These are typically either expired or they pertain to deceased debtors. As I said, the net book value of these loans is marginal. We sell them for very small book profits to specialists who like this type of residual value, and therefore, in no way, shape, or form, you should give any attention to the gross book values if they decrease a bit. We will continue to sell tails. We have done it already last year in a significant amount, and we will continue to do it because we think it gives a much cleaner and fairer picture of the size of the business, and it is also probably in the long run more efficient not to have improductive stocks on your book that will not generate significant collections given our business model.
Page eight, rate sensitivity is always an item of interest for the analyst community, so we put in the page again. Here we simulate the effect of a shock 50 basis points decrease in reference rates. That is theoretical, obviously. What would be the annual net interest income effect of a step change of minus 50 basis points at the start of the year? You see that that has been reduced by quite a lot. It was EUR 11 million to EUR 13 million in March. It is now down to EUR 6 million to EUR 8 million, and that is based both on increasing the duration of the bond portfolio. We are now at 4.2 years. The overall proprietary portfolio increased a bit also in size in the last few quarters.
The second thing is, obviously, it's common sense, increase the mix towards fixed rates where we can, and that's especially possible in leasing where we're now at 82% of fixed rate contracts. On page nine, we give you a little bit more detail on the dynamics of the interest rate effects. We show you the commercial banking interest income, so keep in mind this does not include the MPL business, it does not include the non-core, and it does not include treasury, okay? We open gross interest income and gross interest expenses and the base rates. What happens in the quarter in the blue books? In the blue box, you can see that the base rate at the bottom goes from 3% to 2.6%, so we lost 40 basis points in the base rate.
The aggregate interest income consequently, given that in commercial banking most of it is rate sensitive, decreased by 40 basis points. That is obviously a combined effect. It includes the base rate effect. It includes pricing. It includes mix effects, but in any case, combined was - 40. In the meantime, our actions to reduce the aggregate cost of funding of the bank generated a saving of 30 basis points, right? The net effect is now below 10 basis points this quarter on the back of a 40 basis points rate reduction. On this basis, we give a bit of a flavor, right, for how we are positioned now. Keep in mind that throughout 2024, we had on average three quarters of a billion of excess funding that we maintained for prudential reasons, given that we had these EUR 2 billion of TLTRO to repay.
In the first quarter of 2025, you can see the combined effect of the decreasing rate sensitivity and the cost of funding reduction measures, and these are now starting to catch up with the base rate reduction. The dynamic is going in the direction in which we want to go to control, right, the interest rates effects. Looking forward, you can expect that in the coming quarter, credit spread repricing initiatives will enter. These pertain to the stock, so it's not just new flows. Most of the factoring stock will be repriced upwards. That's a spread effect. You will have an aggregate cost of funding that will continue to go down, right? That's the way we are managing the interest rate scenario, and maybe in the Q&A we can come back on it if you have further questions on this. Page 10, costs.
Starting with the blue, other operating costs are down EUR 6 million. EUR 4 million lower consultancy and other suppliers cost, EUR 2 million the project costs that have been completed so they do not reappear, EUR 1 million travel and living expenses. You can see therefore that the first part of the extraordinary costs linked to the potential M&A are actually more than offset by the savings. We have the costs directly linked to MPL recovery, which have always a bit of seasonality, so that is EUR 4 million Q-on-Q, and there is finally EUR 1 million of personnel costs, mainly timing effect, so I would not read too much into it. On aggregate, we reduced the costs EUR 4 million year on year and EUR 9 million Q-on-Q.
It's very good results, and I commend all the personnel of the bank for the discipline and the care that they've put in in keeping our cost base sustainable. Page 11, loan loss provisions. Stable at historical low levels. EUR 8 million versus EUR 9 million in the previous quarter. You can see that the coverage levels remain very high also compared to most other banks, so we have a total of 48% coverage of bad loans. 48% coverage of the overall, 70% on bad loans, 44% on UTPs, and 12% on past dues. NPE ratios, you can see that go slightly up. We want to explain that a bit. We've had multiple quarters in which it was gradually going down. We see two effects. One is the denominator, right? So the performing loan stock has seasonality given the factoring business.
Secondly, you have a little bit of an increase in the non-performing loan stock, in the NPE stock. That is up EUR 19 million Q-on-Q net, and that is due to a few very specific client situations. I would not read too much into it in the wider picture. The presence of guarantees has limited the loan loss provision impacts, which, as I mentioned, are only EUR 8 million. We did not use overlays to keep the loan loss provisions low in this quarter, right? It is the effect of guarantees. We expect gross and net exposures to be managed down in 2025, to get them below the starting level of the fourth quarter of 2024 in the absence of any external shocks. We are working on offloading a bit of that stuff. You know that the gray box pertains to past dues and UTPs of the Italian public health system.
That's a runoff portfolio. It's gradually going down as we collect. You can project that going down towards zero in the next quarters and years as we collect these loans. The number probably to watch with more attention is the number that excludes it, so the 5.7 gross and the 2.9 net. Page 12, we always get questions about macro, given that we serve a good part of the Italian SMEs. Are we seeing any issues? Are we seeing any particular risks in the economy? The answer is no. We have no signs of widespread macro risk materializing yet. There is, of course, a lot of uncertainty in the world, right? Tariffs, supply chain disruption, exchange rate effects. We will keep monitoring this very carefully, but as for now, payment days in factoring are down relative to the previous quarter. Stage one and stage two loans, the mix is favorable.
You can see that stage two is actually down to 7%. Probability of default is down to 2.8% of the aggregate performing portfolio. Some slightly riskier position exited, so once again at a historical low level. No strange signals either in the rating migration. On aggregate, we can say that today we do not see any issues materializing. Now, of course, looking forward, we can discuss later, but as for now, all seems to be very solid and calm. Page 13, very nice piece of news. MSCI upgraded our ESG rating to AAA. That is the highest level, obviously. It happened on the 29th of March, so in the quarter. It came back. It came on the back of an upgrade last year that got us to AA. We took two notches in two years.
I think there are only three banks in the country that have a AAA rating, so we're very pleased with that. We gave you some details on the rating in terms of how they break it down. Financing environmental impact, the industry average is 4. We score 6.8. Human capital development, the industry average is 3.7. We score 8.4. Corporate governance, 6.5. We score 6.9. Corporate behavior, 5.9. We score 6.4. We are very proud that the integrated approach to sustainability of our controlling shareholder that drives these initiatives and sets these ambitions is clearly bearing fruit in the conduct of the bank, also in the way the core business is executed. That is both on the commercial banking side, obviously, with all the environmental things that are going on there in the credit side and socially in the MPL side.
Page 14, going towards the end, capital ratios, 16.55%. I want to underline that that number, 16.55%, excludes the net income and dividends that you could estimate for the first quarter of 2025. Had we computed that, we would have had another 20 basis points. First of all, RWA effects. On aggregate, the total RWAs of the bank decreased by EUR 253 million. We have, on the credit risk side, a neutral effect. We have some decreases by lower volumes that are offset by higher repo activity and by some off-balance sheet exposure under Basel 4. The net of these numbers you see there is more or less neutral. There is an increase in market risk and CVA, and a significant decrease in operational risk due to the new calculation methodology that Basel 4 prescribes for Banca IFIS.
There we gain or lose, depending on how you want to see it, we have a reduction of EUR 337 million of RWAs, and that gave us a 43 basis points boost on aggregate. Other effects are not very material: lower intangible assets and slightly higher calendar provisioning. All in all, 16.55%, excluding the net income that we report this quarter, creating a very, very solid base for both facing a bit of volatility maybe in the remaining of the year on the macro side and for a successful potential integration of Illimity if the Illimity shareholders decide to accept the offer. I would not go into page 15, which contains a little bit more detail on the quarterly results, and instead hand over to the moderator for Q&A. Thanks for your attention this far.
Thank you. This is the Chorus Conference operator.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Irene Rossetto, Banca Akros. Please go ahead.
Yes, hello to everyone. Thank you for the presentation. First of all, a couple of questions from my side. What do you expect in terms of net interest income evolution in the coming quarter? Do you see any sign of macroeconomic slowdown? In particular, do you see some asset quality deterioration following the introduction of the tariff by the Trump administration? Thank you.
Thank you. Yeah.
In terms of net interest income, you saw some details in the presentation, right? I will not repeat the details that we tried to share so that you could maybe model a bit on your own. Let me say that the dynamic, the real synthesis is that we are catching up with the rates environment, right? What happens when your IBOR goes down is that on the asset side, your pricing suffers immediately. On the liability side, reducing the cost is a slower process because you need to wait for your funding to expire and to renew it with cheaper funding. Some things are fixed rates, especially on the retail side, etc. What we are now seeing is that after roughly a year, a fairly significant steep reduction in base rates, we are catching up on the cost of funding side.
What you may expect in terms of evolution, we're happy to share an estimate. Annual net interest income on aggregate for 2025, we expect it to be down between 6% and 8% roughly with respect to 2024, right? That's how you should expect it to pan out for the full year on the basis of the dynamics that we showed. On macro, yeah, it was also in the slides. There's a lot of stuff going on, right? Not only do we have uncertainty on what the tariffs at the end of the day will be, but there's always, and there's a lot of, there's a lot of discussion going about how it will eventually land, but you also have the effect of the uncertainty itself that leads to probably corporates being a bit prudent and being a bit careful in capital allocations and in new investments.
We expect volatility in terms of tariffs. We might have some fiscal policy or stimulus in Europe, also around the defense funds. There is some uncertainty on rates because it is not clear what the inflationary picture is or how the central banks will react. Certainly, volatility on exchange rates. Dollar's been depreciating, as you know. A bit of intangibles, such as consumer and corporate sentiment. As we showed, if you ask us today if in the credit book, even with forward-looking indicators, we have any sign, right, of things turning worse, we do not. If you expect us to make a forward-looking statement, I would probably take another look around probably July and more likely September as we see what the effect on corporate turnover and corporate profitability and consumer sentiment is, especially in the U.S., in the light of the tariffs.
It will take a few quarters for these things to translate into the real economy and then to translate into credit book. It is very soon to say. I would say for now, all is very good. We had a few of these cases in the past. I remember I got the same questions when the Ukraine war started, when we had this huge inflation spike, when energy costs seemed to be crippling European production. In the end, the effect of these things has been manageable. I am not making any predictions now, but let's take a look this summer when we see how these things actually then pan out. I hope I answered you, Irene.
Thank you. Thank you very much.
The next question is from Manuela Meroni in Intesa Sanpaolo. Please go ahead. Good morning. Thank you for taking my questions.
I have two questions. The first one is on slide nine. The commercial spread has declined by 10 basis points in this quarter, so much less compared with the decline reported in the previous quarter. You also talk about credit spread initiatives. I am wondering if you can share with us when you expect the stabilization of your commercial spread. The second question regards the outlook. This was a pretty strong quarter. There were significant trading profits, but also some one-off costs. I am wondering if you confirm your full-year net income guidance.
Thank you, Manuel. Sorry, I was replying to you with the microphone turned off, so I will start again. You asked about evolution of the spreads. A little bit tricky because it depends on a lot of things.
I would say probably that, and I'm looking at the CFO now as I talk, I would expect the overall spread, right, that you see on page nine to be at its bottom around Q3. I think from then onwards, we may see a recovery because funding costs will continue to go down, and your IBOR, we hope, might stabilize. The lowest point, I think, will be Q3, and we do not expect a drastic reduction from here onwards, and that is what we wanted to show on page nine because we think that we have got it under control. We mentioned, I think, an expectation for aggregate cost of funding for the full year, right, which we expect to be at around 3.3%, right? I think these are the numbers that you need to figure it out, to figure out the outlook for yourself.
In terms of guidance, yeah, we gave a guidance that said broadly in line with last year. We are reconfirming it. Of course, the Q1 was pretty nice, but if we look ahead, first of all, the uncertainty that we just mentioned on the macro side, but also we reduced the interest rate sensitivity. We did not completely eliminate it, right? Right, I do not think we can take for granted that there will be four quarters of the same with the same profits as we saw in Q1. At this point, and you know our style in that respect, we confirm the guidance, and if there is something to change, either up or down, we will come back to it later in the year. One thing I want to just react to, you defined the contribution that we had as trading profit.
I would like to underline that we are looking at the contribution of a very high-quality, fragmented, selective equity investment strategy with minority stakes where we co-invest with private equity players that over time has given a lot of confidence in our ability to select these investments. It is true that you do not have it every quarter, but I would consider it core, and I would consider it fairly recurring, right? Although, obviously, Q1, for seasonality reasons, can be a bit richer because you do the valuations on the basis of the full-year 2024 numbers of the targets, right? I would not fully qualify it as trading results. I would associate it with core business in the commercial banking and our structured finance expertise. Thank you.
Thank you for the clarification and the answer.
The next question is from Fabrizio Bernardi at Intermonte. Please go ahead.
Hi, everybody.
This is Fabrizio with Intermonte. I have a few questions. As you can imagine, he's on the Illimity play. In your press release, I think you mentioned that the regulator requested Banca IFIS shall carry on due diligence for the termination of the badwill resulting from the transaction to be certified by an external auditor and sent to the Bank of Italy. I am wondering why the ECB made this request. First question. Second question is, did you expect the write-off of Illimity that was announced a few weeks ago, and if this has been included in your numbers, in the offer? What do you think about the results of Illimity if you can share your color or flavor? What is your common equity to run expectation after the completion of the offer? And some color about the acceptance rate of the offer.
It is below 60%-70% of the share capital. What do you do if you end up with two listed entities? Finally, given that Illimity has some important shareholders, if you have spoken to them in order to understand if they like or not to accept your terms?
Yeah. Thank you. Very clear. Quite a list. I'll go through it one by one. I wrote them down, but if I miss something, you will remind me, I hope. Why did the ECB ask for a due diligence? I can't talk for them, obviously. I can tell you what my perception was. First of all, we did an unsolicited offer, so there was no possibility to do a due diligence from the outside, right? Obviously, that is known to the regulator.
They asked us, once the transaction is complete, if the shareholders decide to tenure the shares, right, that we go through the balance sheet and verify the exact amount of the target's equity to then have a reliable number for the badwill. We see it as a normal request, and I want to underline that given that it is an outside-in transaction, right, and an outside-in valuation, and I want to underline that we would have carried it out in any case, even if not requested by the ECB, for the certification of the PPA, right, of the purchase price allocation. That type of certification is done with an external independent auditor, typically. It does not really impact what we would have done anyway. I also want to remind everybody that illimity is a regulated entity by Bank of Italy.
It's listed on the STAR segment, and it has requirements on governance, on reporting, on controls, and equal to the ones that are applicable to Banca IFIS. We operate in the same segment. We find this a reasonable request, and we're not overly concerned with having to do that. We would have done it anyway. On the write-offs, were we expecting them? No. We had no prior knowledge. What I would say is that, of course, we took note, and we think on the basis of what came out that the offer that we made is definitely, and even more so, a great value creation exercise both for Illimity shareholders and for Banca IFIS shareholders, right? You asked me for some comment on the results. I would rather not comment on other banks' results, not even if we are engaged in a possible transaction.
I would rather not comment further on it beyond saying that what we read this far confirms our motivation to do the transaction, and in our opinion, confirms the fairness of the price that we put out on January 8th, which was before, obviously, this news came out. CET1 ratio expectations, also in the light of what you mentioned. We had, even at the start of the previous business plan, always a target of remaining above or around 14%, right? Of course, it went better, meaning that the three-year plan, I mean, meaning that we ended up with more profitability, more dividends, and more capital. That was roughly our target.
The indications we get from our controlling shareholder is to keep managing the bank in a safe way, meaning that we want to have this level of comfortable capital also after the completion of the merger, and we therefore do not see any reason to significantly change this outlook or this approach on the CET1, even after the merger. The acceptance rate of the offer, it works like this. I just want to reiterate it. If more than 66.6% of the shareholders tender the shares, then the offer is valid. If anywhere between 45% and 66.6% of the shareholders or the shares are tendered, then we can discretionarily waive the threshold and still accept it. In any case, the two entities will remain separate and listed for some time. Our ultimate objective is and remains in both scenarios to get control of the extraordinary shareholder meeting and merge the entities.
What we will do in the case of an acceptance rate between 45% and 66.6%, if we decide to waive the condition, is to partially execute the synergies because not all of them require the entities to be merged, progressively work towards the merger, and in the meantime, do the due diligence that was mentioned before, right? That is how we reason about the acceptance rate. It is valid beyond 66%, and between 45% and 66%, we have the possibility to waive the condition and to still go on. If we do that, we will still pursue a good part of the synergies. Last question. Have we spoken with Illimity shareholders? We got, as you may have seen, CONSOB authorization just very, very recently in the last hours. We now have an acceptance period from May 19th till June 22nd.
That is the time in which Illimity shareholders will take a position. First, before that, the Illimity board needs to take a position on the offer, so we're waiting for that too. I can only comment on two shareholders that have made public statements that were, I think, constructive about the offer. There is no firm commitment from anybody, but there are a few large shareholders that have made public comments on their constructive approach towards the offer. That's where we stand today, and we will discover the remainder during the offer period that we approach with confidence.
We think we have a great story and value creation opportunity also for the Illimity shareholders based on Banca IFIS's proven approach and track record in terms of creating recurring industrial profits that we may even augment with the synergies that we think are quantified in a very reasonable way, and that can be done in a socially responsible way.
Very clear. Thank you.
The next question is from Simonetta Chiriotti, Mediobanca. Please go ahead.
Good afternoon. Thank you for taking my question. It is about the NPL segment. I would like to know if you could just give us an indication of the strategy going forward in this segment. Should we expect the GBV to end after this process of sale of the tails? That is just a broad indication. The second point, you mentioned some forward flow agreements.
Wondering if you could give us a bit more color on this. Finally, on the partnerships that you have mentioned as the instrument to increase growth in the coming years, if there is any update on this aspect. Thank you.
Yeah. Simonetta, thank you. Very clear. As I mentioned, you saw the gross values going down because we did some housekeeping, and you saw the net values remaining stable on the basis of both our collections and the new acquisitions, right? The strategy in the NPO business is the following. The NPO business is core. It is a good profit contribution engine, and we think it is a resilient type of business for the reasons I will explain in a second, also in a context in which the Italian non-performing loan stocks on the balance sheet of the banks have decreased a bit.
We will continue to sell tails of portfolios in order to have a meaningful balance sheet without having on it huge amounts, also in terms of numbers, so just numbers of loans, right? Huge amount of loans with significant gross book values, but very marginal net book values. Expect us to do some further sales of these tails, right? This will never go away. We buy, we do the workout, and when we get to the tail end, we leave it to other specialists. Over the next quarters, expect some more disposals, roughly of the size that you have seen. I will not make any firm predictions. I mean, we do not specifically have to do it, but we think it is just good housekeeping to do it. With respect to the forward flow agreements, some originators are happy to enter in these. We think that there are clear advantages.
Long-term corporations work better in this area. You have less hassle with the auctions. You have a more fluid portfolio handover. You get to know each other. You get to, more also, given over time, you get to a more refined understanding on both sides of the values of the portfolio. You should imagine that we have a few consumer finance specialists that have made these types of transactions with us, sometimes also in competitive processes, right? That will give us certainty of flows over the next quarters. Strategy looking forward. First of all, we should keep in mind that it is true that there are less non-performing loans on the bank's balance sheets in Italy at present. If you look at what is produced, the part of small tickets unsecured, so families, right, is gradually increasing.
That is because consumer credit tends to generate, as part of its business system, non-performing loans at the tail end. It happens every quarter. Irrespective of upturns, downturns, the economy, consumer credit generates a certain flow of non-performing loans. Consumer credit in the country is growing significantly and has grown for years. We are in a place with the NPLs that is looking a lot more resilient to us than, for instance, corporates, which had the huge wave of 2011-2015, which today is obviously very different. We are in a place where small tickets unsecured, NPL management, and purchasing, we think can be for specialists that have scale like we do, can remain an attractive business over the next years. In this, we are going to approach it with some co-investors.
That means sharing a bit of revenues and a bit of remuneration with third parties and having in return the benefit of not being exposed to calendar provisioning. We're quite far ahead on this project. We have numerous conversations ongoing. I think that before the end of the year, we will give the market a very detailed description of this type of asset management strategy, which will continue to generate value for us over the next years. I'm being told that I may have said the 22nd of June at the end of the offer period. I meant the 27th. So I correct myself. The offer period is from May 19th to June 27th. Sorry for that. I misspoke.
Thank you.
The next question is from.
Thank you, Simonetta.
The next question is from Davide Giuliano, Equita. Please go ahead. Hi.
Good morning, and thank you for taking my question. I have just one left regarding NPL. NPL performance was a bit weak in the past two quarters, and this quarter was, by contrast, very, very good as you are now back on the market. Also, operating costs were also down in the division year on year despite revenues that were up. Can you elaborate for a moment on the reason why for this decline in costs? Most importantly, looking at the broader cost base for the bank, what can we expect for the coming quarters? Thank you.
Yes. Yeah, the NPL division, what happened there was that as we integrated Revalia, which was fairly sizable for us, we did not purchase other portfolios. Revalia came in altogether, and we lacked a bit of new material, right, that would have been bought in a normal situation, right?
New portfolios coming in, give us in the initial quarters, always gives a bit of extra contribution just because of the way the collections work. We suffered a bit in Q3 and Q4 because of the lack of these purchases, given that we were focused on Revalia, as I mentioned. What you see happening in Q1, it's not so much that the new purchases are immediately generating value because there's some delay there. What happened there is that for at least six months now, the bank has started a very, very thorough and technical approach to managing and revisiting the existing stocks. This is something that you can expect to continue. It's just further sophistication coming into the recovery machine. Great job on behalf of all our NPL colleagues in that respect.
We're very pleased to see it because that's just progressively the value of the existing stocks that's expressing itself. In the meantime, we're also purchasing again. We're happy with the NPO division. I don't have anything else to say. I mean, it's difficult to make very precise predictions on every single division for the next quarter, but we're happy with the way this is evolving, and we're happy with the way Q3 and Q4 were corrected, if you will. Costs. There was a lot of discipline this quarter. Don't expect it to be exactly the same in the next quarter, also because, frankly, some extraordinary costs were coming connected to the extraordinary transaction, regardless of its result. Obviously, these are external fees. They are all market-based, but they're sizable given the size of the transaction, right? We have a bit of that coming in.
There's a bit of seasonality probably. I wouldn't count on the cost to be continuously going down at the rate at which they went. Good quarter, but then next quarter, some extraordinary costs will come in, and you should keep it into account when you think about future profitability. I guess that was it, Davide, yes?
Yeah. Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Giuseppe Grimaldi, BNP Paribas Exane. Please go ahead.
Good afternoon, everybody. Thanks for the presentation. I have actually two questions. The first one is around the cash collection trend that we're seeing right now. Just can give us a bit of an update on what you're seeing. The second one is a bit of a modeling one.
This quarter, you saw tax rate that went down into the quarter compared to last year. How should we think at the tax rate for the full year? Thank you.
Yeah. Thanks. I'll pass the tax rate question on to the CFO. I'll answer on the cash collection of the NPL. Yeah, I touched on it in various moments. I won't repeat myself too much, but what you see is a healthy EUR 100 million, roughly, cash collection per quarter. Expect it to remain like that, roughly, right? We've been reliable in this respect, and most of it comes from the existing portfolio. The model, and if you look at the appendix of our presentation, you always find real cash collection and model cash collections, right? You can see that over years now, the models have been prudent.
We are comfortable with expecting the same in the future. Why did it happen? A mix of things. A little bit of refocus on shortening the times, right? We also do some client transactions where we shorten the timeframe of collection and leave on the table a little bit of value for the client. That is one thing. Transactions, basically, voluntary transactions. A part of it is the whole focus on the processes and the approaches in keeping the payment plans alive, for instance, that we did in the servicing business. I just mentioned it. It is just an industrial approach that tries to innovate, tries to improve, tries to streamline the processes, tries to remain efficient. On that basis, we think our stock and also what we are buying can continue to keep us at roughly EUR 100 million cash collection per quarter, roughly.
Maybe we will have a quarter of EUR 90 million, and then maybe we will have a quarter of 105. I do not know, right? That is roughly what you should expect. I will give Roberto the floor for the text.
Thank you, Fred. Thank you, Giuseppe, for asking. Actually, we are applying the patent box rule thanks to our IT investment that we made in the past. We do expect tax rate for this year to stay around the 30%.
Thank you. Very clear.
Thank you, Giuseppe.
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Thank you very much. We have nothing to add. As always, the investor relations team is here to support you for any further questions you may have.
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