Passera: “Illimity flies. Here are the next moves. And on M&A”
“Today we have 7.3 billion in assets, we grant more and more loans and increase our profits, maintaining minimal risk. And we do all this by serving an important sector such as small and medium-sized businesses, which others ignore.” This is how Corrado Passera, founder and CEO of Illimity, presents the 2023 results to his analysts, which showed a record profit of 104 million, against the 100 million expected. In this interview with Il Sole 24 Ore, Passera takes stock of the challenges overcome and future ones. 2023 was a significant year for Illimity: profits increased by 39%, thanks also to the partnership with Engineering and the revaluations of distressed loans.
“Illimity is a flexible company – he adds – which adapts to the environment in which it operates. We have faced a series of unexpected events in five yearsi, but we reacted well. As a bank specializing in SMEs, we have always focused on three areas: regular lending, restructuring and distressed loans. However, the distressed credit sector, due to rising rates and regulatory changes, is becoming less attractive, with fewer opportunities for growth and profits. Does this mean you will abandon bad loans completely? Means that we will stop investing directly in impaired loans and will gradually sell those we have in the portfolio. But it's not a turning point. From the second half of 2023, we have gradually reduced direct investments in non-performing loans, which now represent only 4% of our assets.”
What will you focus on now? “We will continue to do what we already do, with a greater focus on regular lending and likely risks. The distressed credit division, which has so far provided senior financing and investments in portfolios and non-performing loans, will continue to finance counterparties with secured assets. Additionally, we will continue to enhance ArecNeprix. Will this help the stock, which has been underperforming? I don't make stock market predictions. In recent years, the market has not viewed the non-performing loan sector positively, with which we are associated, even though it was important to us.”
However, this sector has significantly reduced its importance in the business mix, which is now increasingly focused on corporate and investment banking for SMEs. Do you expect Italy to see a new wave of non-performing loans? Credit deterioration is expected to be much less significant than in the past. However, there will still be a secondary market and there will be room for specialist operators like us to derive value. Illimity is working on a new industrial plan. What are the times? The market picture is still uncertain: there are elections in the United States and Europe, inflation is slowing down and the ECB will make decisions on interest rates. As soon as there is more information, probably in the second half of the year, it will update the objectives until 2025 and beyond. Growth will continue to be our priority. We will gradually understand the specific evolutions, but we are confident that we will continue to grow.
“We will distribute a portion of our profits, between 20 and 30%, and invest the remainder so that we continue to expand. Could this expansion include the valorization of some of our assets? Within our portfolio we have some core businesses and some technology businesses (such as Hype, b-ilty and Quimmo) that aim to create value to support our growth: this could mean partial sales, partnerships or listings. By 2024, all of these entities should reach at least financial equilibrium, allowing us to calmly plan and further develop our core businesses. The question of banking consolidation remains open. What role does Illimity want to play? There is room for consolidation in traditional banking, but it's not our industry. However, there is certainly room to expand into credit-related services in difficulty, at the service of non-performing loans and asset management, in which we are already present”.
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