(Telestock) – Hero BFF Bank in the Mid-Cap basketwith an excellent performance of 11.14%, after the Board of Directors responded to the Bank of Italy’s concerns on credit assessment, governance and compensation.
The weekly analysis highlights the more pronounced trendline of the stock compared to the trend of the FTSE Italia All-Share. The medium-term scenario is always positive, while the short-term structure shows some weakness, read by the relative indicators, due to the opposition of the resistance estimated at 10.59 Euro. The control of the short-term supply situation by the supports at 9.94 is functional. The possibility of a continuation of the corrective phase towards 9.6 is concrete.
The Board of Directors of BFF Bank has approved the sending of its own determinations to the Bank of Italy. BFF’s response – explains a note – is aimed at achieving a prompt resolution of the findings relating to credit classification, governance and corporate remuneration practices”.
The Board of Directors first of all resolved to increase the accounting rate by competence of the Default Interest and the lump sum compensation for the recovery of the credit at 65%, from the previous 50%, generating additional one-off pro forma capital for approximately 105 million as of March 31, 2024. The new accrual accounting rate is significantly lower than the weighted average of the historical recovery rate of 77.5%. The change in rate, which will be applied to the half-yearly report at 30 June 2024, allows for a more accurate representation of the profitability structural of the Bank.
BFF then has credit portfolio reclassified for prudential purposeswith a pro forma increase ofPast Due exposure as of March 31, 2024, equal to approximately 1,361 million, which generates Additional RWAs pro forma of approximately 1.783 million and pro forma IFRS 9 provisions of 1.2 million. “The Bank continues to focus on optimising RWA – the note underlines – through the strengthening of the
collection process, the development of the AIRB model, and the assessment of the application of other mitigating factors. At this stage, no assignment of receivables has been made. The application of the ‘prudential backstop’ will start at the end of the second year from the date of
classification of Past Due positions, after June 2026.
Following the reclassification the Pro forma CET1 ratio as of March 31, 2024 stands at 11.4% and the TCR at 14.3%, significantly higher than CET1 SREP ratio equal to 9% and the TCR SREP ratio of 12.5%, reflecting: an excess of capital compared to the 12% consolidated CET1 ratio target for dividend payments, equal to €49 million; an excess of capital already generated with the first quarter 2024 profit, equal to €41.5 million; the one-off capital generated (€105 million) from the increase in the accrual accounting rate of the IdMs and the lump sum compensation for credit recovery to 65% of which €98 million as a one-off pro forma capital increase at 31 December 2023 and approximately €7 million as an additional pro forma adjusted net profit of the first quarter 2024).
BFF provided feedback to the Regulator on governance issues through an intervention plan approved by the Bank’s bodies and has adopted all the measures deemed necessary to remove the findings of compliance with the business practices on remuneration mattersalready resolved with the approval of the 2024 Remuneration Policy and with the agreement on different methods of implementing the CEO contract.
In reference to the next Additional Tier 1 bond couponthe Board of Directors of BFF Bank has verified that all conditions regulatory and contractual requirements for distribution are satisfied; therefore, the next payment on 19th July 24th is confirmed.
BFF believes that “the feedback provided can respond to the critical issues raised by the Bank of Italy, while the constructive dialogue with the Supervisory Authority continues,” and that “the economic and financial outlook remains substantially unchanged and confirms targets for 2026″.