NPL Meeting - Updated Market Watch

Banca IFIS held its annual congress and published a flash update about the market.

Banca IFIS held its annual congress and issued a rapid update on the market: in 2022-2024 new impaired flows are expected to reach €82 billion, - €10 billion above February's forecast - while NPL transactions should amount to some €35 billion in 2022.

During the morning, after a speech by CEO Frederik Geertman, Lucrezia Reichlin, Professor of Economics at London Business School, gave her view on what the priorities are for the country in light of the macro-economic scenario. This was followed by Paola Severino, President SNA & Vice President Luiss Guido Carli University, who delved into the topic of justice reform and NRP interventions, with particular reference to the impaired loans market, and Giovan Battista Sala, Head of Banking Supervision Service 2 at the Bank of Italy, outlined how supervision will react to a new shock and then move from the NPL phenomenon to a broader view that looks at global challenges.

Two panel discussions followed: the first, titled "The evolution of bank de-risking to the test of the real economy: the banks' point of view," had Elena Goitini Ad of BNL BNP PARIBAS, Giuseppe Castagna, Ad of Banco BPM, and Corrado Passera, Founder & Ad of Illimity, on stage. The floor was then turned over to John Priest, MD - Head of COAC Europe & Australia of Cerberus, Eric Clause, Executive Vice President of PIMCO, Claus Spedtsberg, President of FENCA and Katia Mariotti, CEO of Ifis NPL Investing who discussed "The challenges of the macroeconomic scenario for investors and servicers: international experiences."

Despite the worsening macroeconomic scenario brought about by rising energy, commodity and food prices and rising interest rates as a result of the ECB's tighter monetary policy, the soundness of the Italian system will allow new flows of impaired credit to be mitigated.

According to Market Watch Npl, €82 billion of new impaired credit flows are expected in the three-year period 2022-2024, an increase of €10 billion, 6/9 months behind last February's forecast and a peak expected in 2023. Some elements of stability in the Italian economy will be able to play a mitigating role: the wealth and modest indebtedness of households, the resilience of businesses that continue to invest, government interventions, and finally the improvement in the soundness and profitability of banks, which had already reached an Npe ratio of 4.1 percent1 by the end of 2021 (thus below the EBA target of 5 percent). A figure that by the end of this year, according to the report's estimates, will fall to 3.2%.

In this context, the Italian NPL industry has seen its role grow in importance, allowing banks to carry out a major de-risking on their balance sheets, with an estimated 357 billion euros of Npe portfolios sold between 2015 and 2022. Also confirming the vitality of the NPL industry is a continued growth in revenues from 2013 to 2021 (+90% over the entire period), which will continue with +9% in 2022 and +4% in 2023, with high sales volumes expected (€47 billion of Npe in 2023 and €33 billion in 2024).

In the first 9 months of 2022, €22 billion of Npl and Utp portfolios were transacted (updated as of September 15), while Npl transactions of €35 billion are expected for the full 2022, with the secondary market, now a major component, accounting for 30%.

Link to Event Page

https://www.nplmeeting.it/

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