Earnings call transcript: BFF Bank sees strong Q3 2025 growth, stock rises 1.29%

BFF Bank SpA reported a robust financial performance for the third quarter of 2025, driven by significant growth in its loan book and strategic international expansion plans. The company’s earnings call highlighted a 14% increase in adjusted net profit over the past nine months and a 33% year-on-year rise in net profit for the quarter. Following the announcement, BFF Bank’s stock price rose by 1.29%, closing at €11.02.

Key Takeaways

• BFF Bank’s adjusted net profit increased by 33% year-on-year.
• The loan book grew by 8% to €5.8 billion, with notable expansion in Italy and Poland.
• The cost-to-income ratio improved to 46%, indicating enhanced operational efficiency.
• The company is preparing to open a branch in France and enter the Luxembourg market.
• Stock price rose by 1.29% post-earnings announcement.

Company Performance

BFF Bank demonstrated strong financial performance in Q3 2025, with a 14% increase in adjusted net profit for the nine-month period. The bank’s loan book expanded by 8% year-on-year, reaching €5.8 billion, with significant growth in Italy and Poland. The cost-to-income ratio decreased to 46%, reflecting improved operational efficiency. The bank’s strategic focus on international expansion, particularly in France and Luxembourg, positions it for future growth.

Financial Highlights

• Adjusted net profit: €180 million (+14% YoY)
• Group Pre-Tax Profit (PBT): Up 13% YoY
• Loan book: €5.8 billion (+8% YoY)
• Cost-to-income ratio: 46%
• Cost of risk: 4.7 basis points

Earnings vs. Forecast

BFF Bank’s earnings per share (EPS) for Q3 2025 were not explicitly stated, but the company revised its EPS forecasts upwards in the last 90 days. The stock’s positive market reaction suggests that the results were in line with or exceeded market expectations.

Market Reaction

Following the earnings announcement, BFF Bank’s stock price increased by 1.29%, closing at €11.02. This movement reflects investor confidence in the bank’s growth strategy and financial performance. The stock is trading close to its 52-week high of €11.69, indicating strong market sentiment.

Outlook & Guidance

BFF Bank plans to present new medium-term targets in 2026, focusing on organic growth and reducing its past due portfolio. The bank is also exploring securitization options for its contagion portfolio and continues to expand internationally, with a focus on the French market.

Executive Commentary

"We are back to normal for the bank and all its stakeholders," said Massimiliano Belingheri, Group CEO. He emphasized the bank’s continued growth in the loan book, particularly in Italy, and highlighted the potential for significant upside in the French market until the 2027 presidential elections.

Risks and Challenges

• Potential delays in international expansion, particularly in new markets like France and Luxembourg.
• Macroeconomic conditions affecting the banking sector, including interest rate fluctuations.
• Regulatory changes in key markets that could impact operations and profitability.
• Competition in the factoring sector within Italy and other European markets.

Q&A

During the earnings call, analysts inquired about BFF Bank’s capital management strategies and the seasonality of deposit fluctuations. The bank provided insights into its French market entry strategy and discussed its approach to managing the past due portfolio, reflecting a proactive stance on risk management.

Full transcript - BFF Bank SpA (BFF) Q3 2025:

Conference Operator: Good afternoon and welcome to BFF Bank Group First 9 Months 2025 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be the opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would like to turn the conference over to Massimiliano Belingheri, Group CEO, and Giuseppe Sica, Group CFO. Please go ahead.

Massimiliano Belingheri, Group CEO, BFF Bank Group: Hi everybody. Thank you for joining us today for our third quarter results reporting. I’m not going to spend too much time on the news from our press release from last week. I think what is relevant is we are back to normal for the bank and all its stakeholders. We were a turn focusing on growth, value creation, international expansion, and shareholder return. That’s an important reset for the bank. We will communicate in 2026 our new medium-term targets since we are at the end of our plan. Our financial and commercial performance has continued to be strong following the trajectory of the first two quarters of the year. Our adjusted net profit for the nine months stands at EUR 180 million. That’s 14% higher than the same period of last year. Importantly, the adjusted net profit is up 33% year on year.

On the lending sign factoring, as close September with the highest ever loan book, up 8% year on year. We continue to see good growth in Italy and extremely strong growth in France, as we will see. Importantly, we continue to add to our off-balance sheet reserves that have increased EUR 63 million year on year. That is the part of it is the third income we collect in due course. Funding remains ample and growing. Our loan-to-deposit ratio stands at 73%. The deposits from our transaction services are up a quarter year on year. Repos are down. We have a very strong liquidity position entering the peak hunting season of the end of the year. Our mark-to-market bond portfolio, where there is value that will be seen in our numbers going forward, is up EUR 56 million year on year. That will support the future profitability.

On past due, the vast majority of it is a call towards the public sector. We are down 6% since December. The contagion invoicing are down by almost a third since the recursification of last year. The dynamic of the past due is mostly driven now by the continuous purchases of our business. The front book continues to churn quite quickly. In terms of capital, we have had the confirmation of our P2R. We report a CET1 ratio of 13.4%, a total capital ratio of 16.5%. On our target CET1 ratio, we have over EUR 108 million of excess equity as of September. Those are the key points that you’ve seen on slide three. On slide four, which is a summary of what we already said in the press release, let’s see what we focus on today. First of all, capital return.

We have EUR 108 million of excess capital to our target CET1 ratio. We have asked Bank of Italy to do a buyback for EUR 12.5 million. That’s a signal of our ability already to distribute capital. We know that we have to work on the reduction of the past due. When this will happen, we will see reduced RWAs and incremental capital generation for the business, which with our protective dividend policy clearly protects our ability to continue to grow at a good fast pace. We have more capital. We have more ability to grow. We still have a lot of trapped capital given the relatively high RWA density. Once that gets released, we can continue to support our growth and remunerate shareholders at the same time.

Focusing on growth, clearly for us, it’s important that we look not only at our domestic market, but at a strong engine of growth, which can be the international market. We have approved a new three-year international growth plan. We are ready to actually file the demand to open a French branch, which we think is very important for our development, particularly given the political and fiscal position of that country. We are also entering Luxembourg in global custody under the freedom of service regime, which means that we can actually sell our products to Luxembourg. That is the first foray internationally of our custody and deposit and transaction services business. Finally, which is important after a year and a half, is the ability to reward all the team because the restriction remuneration was, I remember, for remind for all the team, the ability to reward is quite important.

The fact that the bans have been lifted means that we can now continue on our core value of rewarding meritocracy with also participation in the upside that people create. On slide five, one year on, what has happened? Actually, we have more capital today than we had last year, even after the change in the estimate for recoveries of LPIs. RWA density is significantly down from 71% to 66%. Still not there where we should be. That trajectory will release capital in due course. At the same time where we have accumulated capital, we have also continued to grow the business with factoring lending volumes up 11% year on year. Assets under depository are up by 19% year over year, which then drives the liquidity that is needed to continue to fund our lending business.

If we move to slide six, let me focus on a few highlights on our balance sheet. Giuseppe will provide you more details around it. Our loan book stands now at EUR 5.8 billion, is up 8% year on year. It’s a primary driver of our interest margin. It’s important that we continue to add to our loan book. That’s actually not the case in the factoring sector in Italy, as you might have seen from other numbers reported. We are quite proud that we continue to add to those numbers. The bond portfolio is down year on year due to some maturities. We have a positive mark-to-market, which will support, as I said before, our future profitability. Transaction services deposits are stable by nature, but they are up 25% year on year.

That’s actually driven mostly by the depository bank performance and growth in assets, which means actually we continue to add customers and therefore incremental deposits in that business. Leverage remains very strong at 6.4% versus 6.1% in the last quarter. If we turn to the P&L, let me focus on the bottom of the page on the group PBT, which is up 13% year on year. With all the division performing in line or better than last year, the expected Factoring & Lending is actually up 15% year on year. That’s driven by higher volumes and improved margins. Payments is down 70% year on year, but that’s due mostly to, especially due in part, to internal transfer pricing on the liquidity side. And Securities Services is up 42% year on year, with a strong contribution also to the group liquidity. Corporate center is also very strong year on year.

Quite good results overall. Importantly, as I mentioned before, we have over the period increased our off-balance sheet funds by 63%, which is a double-digit growth over the same period. Having summarized the main items, let me hand over to Giuseppe for more details on what you’ve already seen.

Giuseppe Sica, Group CFO, BFF Bank Group: Thank you, Max. Let me give some more details on the positive performance of our Factoring & Lending business on slide eight. Factoring & Lending real yield has further improved. The spread versus DCB rate, which drives LPI and also our cost of funding, has gone from 3.25% in 2024 to 4.41% in 2025. This means together with loan book increase, that revenues net of cost of funding are significantly up year on year, and explain the 15% increase in PBT mentioned at the beginning of the presentation. LPI over recovery is also up year on year. Rescheduling, as we have said in our first-half presentation, has normalized post first quarter. Once again, our off-balance sheet has increased EUR 63 million or 13% year on year. Moving to the commercial performance of the business on slide nine, loan book stands at EUR 5.8 billion.

This is the highest ever nine months for BFF and up close to 10% year on year. The loan book in Italy continues to grow and is up double-digit compared to last year. Underlying the loan book growth is the strengthened commercial performance and also supportive environment, with volumes up 11% year on year at EUR 6.3 billion. Italy is up 16% on the year. Poland, 38% on the year. France, 12 months on, is larger than Greece. We expect significant support from branch opening in a country with strong potential. Very quickly on Spain, which continues to catch up. Volumes in third quarter were at par with volumes in the first quarter of 2024. This is positive news. Now, very briefly on slide eight on payments. We talk about stability, but really both number of transactions are up year on year, 1% and 2%.

Importantly for us, also deposits are up year on year. It is a performance in line, if not better, compared to expectations. Next slide on Security Services. Assets under depository are up 11% year on year, despite some delay in client migrations, which will be expected in the next few quarters. Revenues are up 14% year on year, in line with the overall group growth. The liquidity provided by the division stands at EUR 4.1 billion, which is up more than 40% year on year. This also contributes to the reduction of other more expensive sources of funding, such as repos. Quickly on group cost on slide 12. We maintain our cost discipline while we keep investing in growth. The cost income stands at 46% and is down year on year, within an overall flat cost base.

At the divisional level, Factoring & Lending is up 2% year on year. Payments cost are slightly down, while for Securities Services, OpEx and D&A are up 6%, mainly in relation to ICT system upgrade to support the future growth that we expect. 2025 variable remuneration will be accounted for in the course of Q4 in line with accounting principles. Slide 13 on our balance sheet. We are pleased with the composition of our balance sheet. The liquidity remains abundant, but also diversified. The loan-to-deposit ratio remains very strong at 73%. The NSFR is at 136% and was 129% one year ago, as we reduced past due. The SCR stands at 219%. This is slightly down compared to last year, as we now have more Transaction Services deposits. The head-to-collect portfolio continues to be managed and is down EUR 400 million on the year, mainly due to maturities.

The mark-to-market is positive. We stress once again, we have around EUR 1 billion of fixed-rate portfolio with an average yield of 0.59%. This is a drag to our profitability, and this portfolio is gradually reaching maturity. Slide 14 on our asset quality. The underlying low-risk profile is confirmed. The cost of risk for the nine months stands at 4.7 basis points. This is in line with the first half and in line with BFF historical averages. The NP stock affected by the June 2024 reclassification is down EUR 108 million on the year. We will explain the underlying dynamics in a moment. The NP exposure is almost entirely towards public administration, which is 97% of our NPs. We continue to classify as NPFs also the conservatorships for which we are looking at ruling by the European Court of Human Rights.

As you know, we have received positive ruling already on three cases. We are waiting for more to come. The draft 2026 budget law also introduced a EUR 2.2 billion fund for 2026 to address the financial effects from national and European disputes. This potentially includes also the effects of the European Court of Human Rights decisions. On the following slide, on the evolution of our past due portfolio. First, in the nine months, we only have EUR 144 million of new netors in past due, and these are public administration. Second, excluding the net new exposure, which we have bought in the year, past due has gone down by 44% in nine months. This means that we continue to buy and collect on our portfolio. Third, the contagion invoices are down by another EUR 48 million in the year, in the nine months.

The additionality, of course, in the third quarter is due to August. Fourth, the new business from PA reading past due explains the increase in new business in the past due. By mid-October, we had already filed around 870 injunctions towards the public debtors, representing 83% of our debtors in past due in Italy. This is an acceleration on our collection activity compared to 2024, when we had filed for the whole year 670 injunctions. We will have to see the results of these injunctions as they become collectible. This should and will support further past due reduction. Last but not least, some more detail on capital. On slide 16, we have generated close to 300 basis points capital in 12 months, with about EUR 5 billion RWAs. As Max said, RWA density is trending down, and past due reduction will be an important driver to continue this trend.

We therefore have EUR 108 million of excess capital versus the 13% CET1 target. It was EUR 114 million versus 12% target ratio in June. Excess versus rep target is EUR 180 million. Let me now hand over back to Max for the key takeaways on our business.

Massimiliano Belingheri, Group CEO, BFF Bank Group: Thank you very much, Giuseppe. Let me conclude with a few takeaways. First of all, in the first nine months, we have shown an even stronger balance sheet, and we continue to deliver with a positive commercial performance. Second, we focus again looking at the long-term value creation to balance business growth with shareholder remuneration in a context further of a position with excess capital, but with a higher overall level of capital to protect our business. With that, we conclude the presentation. Thank you again, Giuseppe, and we are ready to take your questions.

Conference Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you’re using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. The first question is from Tomas Oñieda of Kepler Cheuvreux. Please go ahead.

Hello, and thank you a lot for taking my questions. The first one, it’s on the capital management action. You have mandated advisor to evaluate strategic options on your credit portfolio. Can you give us a sense of the scope and the timeline of this mandate, and if you have quantified the potential CET1 relief or risk-weighted assets reduction that this transaction could generate? The second one is on the EUR 88 million of net income not allocated to the CET1 ratio. Should we read that as an early indication of the dividend payout you are planning for the year? Thank you.

Giuseppe Sica, Group CFO, BFF Bank Group: Thank you, Tomas. Maybe I will start with the first question on portfolio management. The company focuses first on the organic reduction of the past due. This is the healthier thing to do to manage properly the business. We are working with advisors on potential securitization. I think that the perimeter is still to be defined. It is too early to give numbers. However, given that we have a large contagion effect, it is fair to expect a significant reduction, not only of past due, but also RWA when this happens. It will not be huge. We do not need to go huge as this will be mainly referred to part of the contagion portfolio. What we plan to place on the market is the junior notes, which is an even smaller number.

Massimiliano Belingheri, Group CEO, BFF Bank Group: In terms of dividend, as we stated collectively, we have excess capital compared to our CET1 ratio target of 13%, but then we have a number of moving parts. For instance, we have the EUR 12.5 million of share buyback, and depending on the timing of the authorization, we might have to deduct them this year or next year. We do not commit today to a dividend level, but the trajectory of the capital is the one that is indicated in the presentation.

Okay. Thank you.

Conference Operator: The next question comes from Giovanni Razzoli of Deutsche Bank. Please go ahead.

Good afternoon to everybody. A couple of clarifications. The first one is on slide 25. I’ve seen that in the other income line, there has been a quite strong acceleration of this line item. If you can please clarify, when compared to the previous quarters and to the run rate also of 2024, if you can please clarify what is this EUR 11.5 million that I’ve seen here. Second question is on the addressable market in France. Can you share with us what is the addressable market for factoring in France and also give us an indication of how it will be relative, for example, to Italy and to Poland?

The last question is, I’ve seen that there has been on a quarter-on-quarter basis, so third quarter when compared to June, a decrease in both of the stock of deposits of Securities Services, but also on the Payments and also on Securities Services. It seems to me that the reduction in the payment is a little bit higher. I was wondering if you can please explain why there was this trend, if it is related to seasonality or what it is attributable to. Thank you.

Massimiliano Belingheri, Group CEO, BFF Bank Group: Thank you, Giovanni. On the stock of deposits, yes, look, there are seasonalities. Bear in mind that we have close of payment coming depending on what is sometimes the day of the month where we close the day where we close the month, you have different movements. On security services, there are different asset allocations. It can explain a large portion of that. What is important for us at the end of the day, what drives the flows in both cases, the volume of transaction on one side and the volume of assets under depository on the other, which are both up year on year. On France, look, the market is significant because the overall expenditure in goods and services by the French public administration, out of memory, based in our annual report, is around EUR 160 billion.

A few years ago, when we looked at France in a report of Banque de France, they indicated roughly 20% of the receivable were paid late. That would mean already EUR 32 billion. Importantly, France a few years back is not the France of today. With the pressure on public finances, we expect payment times to worsen. Certainly, the perception of our client is that those payment times will worsen. When we look at France originally, we thought that it could become as big as Portugal and Greece combined in terms of stock. We are now, if you look at page nine, in terms of stock, at roughly half of where Greece is. If you combine Greece and Portugal, you actually have Portugal. There is a long runway to go, even if we just follow what was our normal expected development.

We think actually France today, particularly until the next presidential elections in 2027, can provide significant upside for the group. That will be even more so with a physical presence in France, which helps us two ways. One is to develop the French market, but second, also to be close to French companies that do not only have public sector receivables in France, but also in other geographies. For us, that is clearly a very welcome development, the ability to now open a physical presence in France. On the other two points, other income is up on the year also because in the third quarter, as we highlight on the presentation, we effected a small disposal of government bonds, which we then bought, increasing the duration by probably three months or less being equal.

It’s important to stress that because most of our portfolio is a floater, this really means moving part of the net interest income in other income. That is consistent also with the messages that we have given last quarter, and we repeated today that the mark-to-market is going to support profitability going forward. On the liquidity, I do not see any specific trends. There is some seasonality. We manage actively repos and retail deposits. These are two lines that we have been able to bring down year on year. There is no negative trend there. Of course, we will have to monitor over the next few quarters what is the right level of repos and retail deposits to have.

Thank you, Giuseppe. Just for the clarification, the EUR 11.5 million quarter-on-quarter increase or also the increase versus the Q1 is largely related to the impact of the disposal of government bonds. Yes. Okay. Thank you. Thank you. Thank you. Bye.

Conference Operator: The next question comes from Manuela Meroni of Intesa Sanpaolo. Please go ahead.

Good evening. The first question is on the contagion portfolio. It has been declined by just EUR 7 million in this quarter. I am wondering if the reduction in the pace of reduction of this portfolio is just due to the summer season or if there are other reasons behind this trend and what we can expect in the last quarter of the year. An acceleration and a recovery of what has not been done in the summer season or, let’s say, you can guide us in another way. The second question is on the Common Equity Tier 1. Could you please clarify what portion of your net profit is included in the Common Equity Tier 1 as of September? The third question is on your business plan. I understood that you are going to update and present a new business plan in 2026.

I’m wondering if it is a 2026-2028 business plan and if you still feel comfortable with your 2026 or if you are going to revise them during the presentation of the new business plan. Finally, a clarification on the dividend policy. You set the new threshold at 13%. Is there still the cap of the dividend related to the net profit generated during the year? Thank you.

Massimiliano Belingheri, Group CEO, BFF Bank Group: Sorry, I was struggling with the technology. The 13%, the new threshold, still has the cap of having non-distributed more than the adjusted net profit for the year as before. On the business plan from 2026, yes, we plan to revise the business plan. We are still discussing if it is going to be a 2028 or 2029 target. To be honest, we will do that after we conclude our budgeting process that usually, actually always, concludes in January after we actually have the year-end stock of receivables clear. On the contagion portfolio, yes, seasonality has an impact. It is not so easy to get the public sector to pay receivables in August if they are not recent. We expect the last quarter to be more fruitful also because there are much more transactions with the public sector where we collect NPIs for the euros.

That usually is a good way to clean up also the backbook. The last question on the equity, it’s around EUR 20 million of the net income that is included in the Common Equity Tier 1.

Could you repeat, please?

Around EUR 20 million.

20.

Is included.

20.

Yeah.

Conference Operator: The next question comes from Simonetta Chiriotti of Mediobanca. Please go ahead.

Good evening and thank you for taking my question. I have a question on volume sending, particularly on the PA segment that in the nine months was quite weak. In particular, in the third quarter, the new volumes in these segments were very low. If you can explain the reason of this trend. Thank you.

Massimiliano Belingheri, Group CEO, BFF Bank Group: Yes. We continue to see on public administration less interest from customers to transact there. That is part of our commercial effort to strengthen the activity on that front. On the other hand, we are quite pleased by the extremely strong growth on the healthcare side where we are growing in Italy. If you look at page 26, 30% year on year. The bedrock of our business, the public administration, represents an area where we still need to get our delivery in terms of execution right.

Thank you.

Conference Operator: The next question is from Davide Giuliano of Equita. Please go ahead.

Hi. Good evening and thank you for taking my question. The first one on LPI over recoveries. What can we expect in terms of the aggregate of LPI over recoveries and rescheduling in Q4? What impact can we expect also from the MBO and let’s say one-off variable personal cost always in Q4? The second one, if you can comment a little bit more on PASDU in the quarter, which increased compared to last quarter despite a slight contraction of the contagion portfolio. It seems that there was a positive contribution coming from new debtors in PASDU. Could you give us more color on this? Can we expect EUR 50 million per quarter going forward, which seems the average for 2025 so far? The last one, if I may, what can we expect in Q4 in terms of results from the injunctions you filed so far? Thank you.

Massimiliano Belingheri, Group CEO, BFF Bank Group: Thank you. We do not give numbers on Q4 until we actually get Q4. There are a lot of moving parts. Both on LPIs and results on injunctions, we can comment. They actually come usually at the end of December. We are early in the quarter. In terms of PASDU, let me focus for a second on slide 15 because there are things which are relevant and there are others which are a bit noise. The noise is the 505 that you see in gray. Why is it noise? Because that, frankly, is what becomes in PASDU because we continue to grow the business and we generate more volume. It happens or does not happen that what we purchase is in PASDU or not, we continue to behave in the same way versus our customers.

We know that that’s a portfolio that will disappear in PASDU if we dismantle the backbook. Actually, if you look at what we keep an eye on in terms of the inherent PASDU generation of the business, it is the second gray column, the 144, which is actually relatively low. That indicates both how much is the total of new debtors in PASDU, which is both contagion and infected portfolio for new debtors, and tells you how much we generate of incremental PASDU on an ongoing basis. If you compare that with what we had historically in terms of PASDU in the business before the reclassification, which was around EUR 300 million, we are not that far off. In a normalized situation, we should trend down to a similar level. It is probably higher given that the business has grown.

In terms of overall level of PASDU to the loan book, that’s where we should trend down. Now, where should we work? I think we should work on the backbook because, as you can see from the same slide, actually the December 2024 book has halved in terms of PASDU simply by collecting or having entities that have exited from PASDU. I would say that’s a very positive trend. Here, what you do not have, which you see in the second footnote, which I think is an even more positive message, there are almost EUR 800 million of new purchases on debtors in PASDU that have been purchased and collected in the period. The turnover is even higher than you can see here because clearly we are taking stock and stock on the two days. It is a portfolio that churns quite a bit.

What is important is that actually the new debtors in PASDU are only EUR 144 million. We got actually debtors out of PASDU of EUR 268 million, which, if you want, is the net, is the trend of really reduction of the inherent PASDU in the portfolio. On personnel, yes, we’ll accrue at year-end. We’ll also do it on the basis of the reported number. Usually, in the year-end, we have a slightly less accrual because we have releases. In this case, we’ll have more cost.

Thank you.

Conference Operator: As a reminder, if you have a question, please press star, then one. Gentlemen, there are no more questions registered. This concludes our question and answer session. I would like to turn the conference back over to Massimiliano Belingheri and Giuseppe Sica for any closing remarks.

Massimiliano Belingheri, Group CEO, BFF Bank Group: Thank you, everybody, for joining us today, but also thank you for spending a lot of time with us over the last year and a half to understand the business, what was going on, and following us. I think we are now, I’d say, back to a more normalized situation. We have work to do in continuing to release the capital through the backbook and capture the opportunities ahead of us commercially. We are quite positive on the trajectory of the business going forward. Thank you very much.

Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.