BFF Bank SpA

MIL:BFF

Earnings Call Transcript 2020-Q1

[Massimiliano Belingheri, executive]

Welcome, everybody, today, and thank you for being with us. I hope you're all well and safe. We're quite pleased to report our first quarter results, which has been approved this morning by the Board, and take the opportunity also to recap where we are in the circumstances that the COVID-19 crisis has presented and the unique opportunities for our business going forward.

If you look at the presentation on Page 2, it's a summary of the highlights of our results. But first of all, we want you to remember that we have committed to pay our dividends in the second half of this year following the ECB and Bank of Italy recommendation, and therefore, we have represented in the numbers the EUR 71 million of dividend being fully available for distribution to the shareholders. Those represent EUR 0.41 per share in terms of per-share dividend.

If you look at the quarter, the quarter has a solid financial performance. We report EUR 23 million of net earnings, EUR 20.8 million of adjusted net income with a 31% adjusted ROTE, and that's despite the fact that, in the first quarter of this year, we had a negative net over-recovery of LPI given the rescheduling of EUR 3.6 million, which clearly has impacted our bottom line. The effect of this is actually that our LPI back-book reserve has increased to EUR 408 million, up EUR 31 million year-on-year. We continue to have a solid cost control with adjusted operating cost declining further in this quarter compared to last year.

Volume growth has been up 8%, almost 10% if you take into account the zloty has depreciated against the euro, and the mix continues to grow outside of Italy compared to the Italian market. New business went up well at 30% year-on-year with EUR 1.2 billion in the quarter, with Italy posting a positive growth of 8% and Spain, a very strong growth also on the back of the IOS acquisition.

Funding and liquidity remains plentiful. We have EUR 4 billion of available funding of which EUR 0.7 billion are undrawn credit lines. That's a great position for us to be in, given the possibility that we have to deploy debt funding in an attractive market, and that should allow us to continue to grow at a healthy clip in the next few quarters. We don't have any ECB financing, and all the ratios are very solid with the LCR at 300% and the net stable funding ratio at 110%. And if you look at the phasing-in of the new regulation next year, we are at 140%.

Capital remains plentiful. The total capital is at 15.3%, core equity Tier 1 at 11.2%. Both numbers exclude the expected cash dividend for 2019 and also the earnings of the quarter, which means that we have an incremental buffer of almost 400 bps of additional capital, which is available for shareholders' distributions.

NPLs continue to have a positive trend. We've reduced them 45% year-over-year. If you exclude the Italian municipalities in conservatorship in the net NPLs, loan ratio is now at 0.1%. The cost of risk is, therefore, very low at 4 bps, 2 of which are for the SME factoring business and 2 for the rest of the business. So despite the circumstances of the economy, we continue to have a pretty good quality of our credit book.

In terms of update on COVID-19, we had already an update for the investors at the beginning of the crisis, and we are pleased to confirm that the trend that we were foreseeing continue to be maintained. We are fully operationally. We are not making use of any emergency funding or emergency capital measures from the regulator. We have a great pipeline in terms of collections -- sorry, of new volumes and collections remains good. I think the only area where it can be potentially affected is the timing of the LPI overcollection, as we will describe later.

But let me dwell into the results. So if you look, first of all, at the reported net income, it's EUR 21 million for the quarter on an adjusted basis and, on a reported basis EUR 23 million. Return on tangible equity remains good. I think I would highlight that, that result has been done despite the fact that we had a negative net over-recovery of LPI of EUR 3.6 million net -- pretax. So EUR 2.6 million after tax, which clearly has affected our adjusted net income. That means that we've actually postponed debt collection in the future, and that's why the LPI back book has grown at EUR 408 million, as you can see in the table at the bottom right of Page 3.

If we look at the revenue side, net interest income, again, has been flattish compared to last year. That includes, again, the impact of the lower LPI net over-recovery. The adjusted return on risk-weighted assets has actually been flat if you strip out that effect, which is also a sign, again, of the ability to continue to perform well in what was, until middle of March, still a very liquid environment. Adjusted net banking income is, again, flat year-over-year, again for the same driver. It's important that we have -- continue to have good recovery of credit collection costs, which have increased marginally compared to last year to EUR 1.1 million, as you can see at the bottom of Page 4.

If we decompose the interest -- the net interest income. On the interest income side, interest income has gone up 3%. And again, that despite the fact that we had net over-recoveries lower by EUR 2.6 million compared to last year. Otherwise, we would have posted a mid-single-digit growth year-over-year. And the stock of LPIs, as you see at the bottom right of the page, has continued to grow at 11% year-over-year with the recognized part, as I mentioned before, growing at almost EUR 410 million.

The cost of funding stays, in the first quarter, 1.66%. That has increased compared to last year due to the fact that we've actually prefunded expecting growth in the future, our balance sheet. We've issued a bond in October of last year, clearly very different market condition than today, at attractive terms, therefore, and we have used that funding, which is more expensive than our average cost of funding, to fund the business in the first quarter. So we expect to have a growth in the next few quarters. Should we absorb that, we should see a reduction in cost of funding.

The same will happen for our zloty funding. The zloty WIBOR, which is the reference rate for most of our funding, has dropped by about 1 percentage point in the last month, with a marginal effect on March, but it will play out in the next few quarters. Importantly, we have a balance sheet which is geared positively to a reduction of the WIBOR at the margin. And our management team locally believes that actually the reduction in the WIBOR will not be translated in a reduction in yields for our customers. And therefore, for the new book, you should expect a widening of margins. Importantly, our funding is all market funding, and we don't have any ECB funding in there.

Operating efficiency has remained good. Costs have gone up marginally over the period. We have the effect on the personnel cost of the hirings we have done last year. We will continue to have a good operating-cost-over-loans ratio at 1.84%, marginally down compared to last year. Again, the cost/income increase is also driven by lower over-recovery, which changes the debt ratio somehow. So we continue to invest in the business on one side, but also to have a good cost discipline on the other.

Customers loans have reached 3 point -- over EUR 3.7 billion, growing 8% year-over-year with Italy up 3%; and Spain up 87%; 40% -- sorry, 57%, excluding IOS Finance acquisition. If you include IOS Finance, 40%. So organically, 40% and then the impact of the acquisition. Poland is up 12%. That's actually despite the depreciation rate of the euro/zloty exchange rate in the last days of the quarter. And therefore, if you look at a constant exchange rate, the growth of the Polish business would be up 19% and will bring the growth in customer loans closer to the double-digit level that we've indicated to the target -- to the market. In general, the international business has been performing well.

We've resumed, as we see in the following page, growth in all our markets with the exception of Portugal, where there's been a cash injection. We were quite pleased to report that our core market of Italy has reported positive growth. We have a strong performance in Spain. Poland has grown as well. And Slovakia, which was a market where we had very little growth last year, has actually increased significantly its volumes.

Importantly, and that's something we will drive more later when we talk about the COVID-19 situation, we actually have a great pipeline going forward. If you look at April, which is the month we just closed, our volumes are up 77% year-on-year. And so that brings the growth in the first 4 months of the year at almost 40%, and that's the first mark where we start to see the effect of customers being more concerned about the payment time of the public administration, more focused in actually generating cash through their operation, and we are really positive on the momentum that the business has in actually taking advantage of that.

With that, I will stop. I will pass to Emanuele to take you through the following pages of the presentation.

[Emanuele Bona;Vice President of Finance & Administration Department, executive]

Good afternoon, everyone. On Page 10, you can see here a snapshot of our funding structure. As the CEO mentioned, the total amount of funding available has reached EUR 4 billion, and that includes about EUR 700 million of excess liquidity, which clearly would allow us high flexibility to absorb the loan growth or longer collection times. The mix of funding remains very, very healthy. You can see that the online deposits have grown by almost 60% year-on-year and they are now at almost EUR 1.4 billion in the 6 countries where the deposits are raised. The liquidity position in terms of liquidity indicators is also very strong. You can see LCR ratio at 326%, and NSFR ratio, as already commented, in 110% and expect it to grow significantly next year when the new regulation comes into place.

As a reminder, we don't use any ECB funding and our funding costs are not linked to Italian government or rating. The EMTN program is in place and has been renewed in January this year. And importantly, during the month of March, the rating agency, Moody's, has confirmed our Ba1 rating with a positive outlook. At the same time, the rating agency took a negative rating action against 14 Italian banks. And currently, we are the only one -- only bank in Italy with a positive outlook. So that's certainly a great achievement.

If you move on to Page 11, the page illustrates the composition of our balance sheet. As usual, the majority of it is represented by customer loans. Let me remind you our conservative asset/liability management policy, which entails having assets with, on average, shorter duration than our liabilities. The government bond portfolio has been reducing versus the end of last year at 21.7% of total assets. The mark-to-market of the held to collect and sale is negative for about EUR 600,000 after taxes booked in equity. But more importantly, the mark-to-market of the HTC portfolio, which is not recognized either in P&L or balance sheet, is positive for EUR 2.6 million. As discussed in the past, the exposure in foreign currency is hedged through foreign-denominated -- foreign-currency-denominated liabilities.

If we move on to Page 12, that's something that the CEO also mentioned. Our net NPLs, excluding Italian municipalities in conservatorship, have decreased by 45% year-on-year and is now down to EUR 3.7 million. That represents a 0.1% NPL ratio. If we include Italian municipalities in conservatorship, the net NPL growth is entirely driven by exposure to those municipalities. As you might remember, we discussed it many times in the past, we have to classify those exposures as NPLs by regulation, despite the fact that BFF remains entitled to receiving the entirety of the capital and the LPIs at the end of the process.

In general, if you look at the NPE exposure, that remains vastly over 80% in exposure towards the public sector. And as discussed before, if you look at the cost of risk, that was 4 basis points in the first quarter, 2 of which are due to a business SME funding in Poland, which has been put in runoff a couple of years ago now. It's important to state that we have not applied any flexibility around the IFRS 9 rules allowed by the European Commission's banking package.

And finally, from my side on Page 13, the capital position that was also commented, total capital ratio of 15.3% and CET1 ratio at 11.2%. The buffer versus SREP requirements is ample. Let me just remind you that the SREP requirements were increased by 5 basis points versus 2019, but the margins remain very ample. There's an additional buffer around 400 basis points, which is, as the CEO mentioned -- which includes the expected cash dividend and reported net income for the first quarter.

Let me also remind you that the RWA calculation remains conservative. It continues being based on a standard model, which takes into account for the exposure to the NHS, takes into account the ratings of the countries where we operate. And downside risk around ratings is very limited. Italian and Portuguese ratings would have to be downgraded by 9 notches to have an impact on RWA. And a 2-notch downgrade of Spain, which would bring it in BBB area, would not have any impact because all the exposures in Spain are classified as central or local government, and therefore, they're not linked to the sovereign rating. Finally, the RWA density continues decreasing as the mix improves, and it's now at 63% versus 64% at the end of last year.

So I'll pass it on to Massimiliano again for an update on COVID-19.

[Massimiliano Belingheri, executive]

Thank you, Emanuele. And we will finish the report on the results, but it is important to look at what is the environment we are looking -- we're operating in and what is the impact for our bank. For us, it has meant to actually open up more opportunities. Operationally, we have been fully operational since the beginning of the lockdown. The team is operating remotely. We may ease some restriction next week, but we are cautious to bring people back in the office since we are able to actually conduct our business in normal circumstances also remotely.

The commercial activity has continued to go well. In general, we had limited interaction with customers before. And since we are dealing with mostly large businesses, we can clearly operate also remotely with them and the processes to sign contracts have been automated as much -- made nonphysical as much as possible. We have seen more demand and more interest from customers. So we're quite bullish on the pipeline ahead across our geographies. As I mentioned, that has been proven in April, where we just had the first taste of it with an increase of 77% year-on-year for that month.

On the collection side, we continue to file new legal actions. There is no restriction on that. Simply the execution of those processes is delayed in Italy. They have been closed since the 9th of May, but we expect those to be relaxed over time, and so not to have a material impacts also since it means only 2 or 3 months of delay in those processes. The area in collection where we are more cautious is on the recovery of LPI from the debtors because at the moment, debtors are very much focused in trying to pay the current outstanding receivables. But this is also traditionally a part of the year where debtors tend not to transact much. So we should see what is the impact actually in the second part of the year to be able to execute those transactions.

And in terms of collection overall of capital, we haven't seen so far a material downgrade of the payment time. The public administration has pushed out to maintain the levels they were at, but in any case, we have included in pricing a buffer to take into account a potential lengthening of those payment times. As Emanuele mentioned before, we have always been very much focused on making sure that we have plenty of available funding at any time to support the growth of our business and the needs of our customers. And so we have ample liquidity, and it was prefunded and that should help us weather any additional growth in the business or any shock on the payment plan.

So where does this leave us? If we look at the financial performance of the business, we think most of the impacts are actually positive for the current situation. And the reason why is, on one side, we expect volumes to be higher. Public expenditure is expected to be stable or growing even in a deep recession, as expected. We expect higher demand from customers, given their increased focus on liquidity, and the potential lengthening of the payment time by the public administration.

It's worth mentioning that we are now very close to the expiry date of the VAT split payment law that has an automatic expire in June. There's no indication that it will be extended. There's no request made by the Italian authorities to the European Commission. So starting from invoices made first of July, we should see VAT most likely coming back in the volumes we buy.

Customer loans, therefore, should be actually going up at a healthy clip, driven by the trends in volumes and DSOs. And that's important because, clearly, that's what then translate into earnings for the business. Capital remains plentiful. We don't see, as Emanuele pointed out, risks that there will be an increase in RWA driven by a downgrade of the sovereign rating. And at the moment, we haven't applied any measure to actually take advantage of the flexibility allowed by the ECB and the European Banking Authority.

If you look at the P&L, loan yields net of over-recovery should actually hold up quite well. We expect in moments of crisis, usually, the price sensitivity of customers gets reduced partially because also banks who -- traditional banks, who are more capital-constrained, tend to price more aggressively. We will see a reduction in the yield on the Polska portfolio given that part of the Polska portfolio is actually loans at variable rates that's on the stock. On the stock, it should be more than offset by a reduction in funding costs, and we expect on the new loans to actually have a widening of the net spreads, at least that's what our management team locally believes that they can apply given their experience in the past.

So on the yield, we expect actually the ability to remain stable and even increasing in certain circumstances net of over-recovery. Given more uncertainty, as I mentioned before, it's actually on the volume of net over-recovery given the constraints on the core system and on the public administration. We're positive that, with the end of the lockdown, those discussions can be reopened. But certainly, that's an area where we have less control, but it means that if we don't overcollect now, we overcollect, clearly, in the future, and the LPI remain, therefore, as to be enjoyed in our P&L at a later date.

Cost of funding should also see a positive trend. We have prefunded our balance sheet. We should see a downward trend with the growth of the assets in our average cost of funding. As I mentioned, we will benefit also from the WIBOR reduction. Operating leverage again should benefit from the growth in volumes and loans given that most of our costs are fixed in nature and because we put through the business, the incremental cost have been actually to develop areas where we're not saturated yet.

Finally, which is important in an economy where we might have -- where we're certainly going to have a recession, given the nature of our business, we expect a fairly limited impact from the difficult economic environment because most of our exposure is towards the public sector and the remainder is towards the health care system. And secondly, we tend to work with larger companies, which, while they will be affected, it will be not as affected as smaller businesses in terms of the residual risk we carry in our book. So overall, we confirm the targets we have highlighted in our business plan. We see a lot of potential upside. Clearly, it's up to us then to execute against those, but in a difficult economic environment, we remain very positive on the positioning of the bank and the strength of our business.

If we look at the legal and regulatory environment overall and the key measures that have been implemented on Page 16, in terms of lockdown, as I mentioned, we have not seen a major impact. There's a possible delay in collection. But operationally, that has not had an impact, and we think the relaxation the country are seeing in countries where we operate should take away that point, hopefully pretty soon. For local entities, we have seen a number of measures, where governments have made available more funding to the local entities to cover their costs, to make their finances less stretched. We think those are positive measures, but they tend to counterbalance the sharp impact that it might have on their cost and also on their taxes. So we think net is going to be neutral for the payment time or in case the measures are not sufficient enough it will continue to have a negative impact on collection and payment times. Italy has -- is discussing a potential injection of EUR 12 billion in the public administration system through a mechanism of loans, short-term loans due within the end of the year to the municipality. So we don't think that will have a material impact on our business.

On the corporate side, the state-guaranteed loans and other financial packages made available by the government for allowing banks to lend to corporate without a lot of risk so far hasn't had an impact on our business. First of all, those tend to be more focused on SMEs, while our customers are mostly large companies. But importantly, it's unclear in a number of jurisdictions how this applies to factoring. There is a discussion, a proposed amendment that will allow factoring to be considered more in this type of guarantees, but it's not yet -- has not been yet approved. So at the moment, we don't expect that to have an impact.

In terms of the measures for banks, again, we've seen a lot of movements from the regulatory authority. We haven't seen anything so far that we -- it actually has a material positive impact on our side. Importantly, the additional flexibility that the ECB and EBA have allowed the banks to do is not being used by us. So frankly, we don't have the need, and then those will be marginal measures at best, and for instance, in the block of dividends we have selected, the choice that is more favorable to our shareholders, given the strong position of capital of the bank.

So having said that, to recap, we have confirmed our dividend for 2019. We just need to let the time pass so the regulator will allow us to pay it in October. The financial performance of the quarter has been solid, both in terms of results, particularly given the low collection of LPI, growth in loans and volumes, the funding base and the liquidity and the capital position that allows us actually to continue to self-fund growth at a healthy clip, which is what we expect given the current market environment. While the crisis of COVID clearly has an impact on the business, on the people around us, on our communities, we're lucky enough that our business actually yield to support the economy in these difficult circumstances, and so we should actually be able to grow at a healthy pace even in this market.

With this, I leave the floor to any questions you might have. Thank you.

[Operator]

[Operator Instructions] The first question is from Antonio Reale with Morgan Stanley.

[Antonio Reale, analyst]

It's Antonio here from Morgan Stanley. Thanks for your presentation and the comment on collection, something I would have asked you. The first question I have is on volumes, which were strong in the quarter. And I've heard your remarks on the solid pipeline looking ahead as well as the color you provided for the month of April. But could you share perhaps where you see most of the opportunities to grow across which countries? And perhaps the usual update you provide on competitive dynamics on the back of corona -- COVID-19, especially in Italy.

The second question I have, you may have commented, but perhaps -- sorry if I missed it. Do you expect a push in Italy towards reducing payments time from public administration, any liquidity injections or government programs that you foresee in the pipeline?

And the last question is on cost of funding, which remains low. Can you remind us sort of your initiatives you've put in place to optimize the funding cost and what other opportunities you may have, including -- or with respect to ECB funding? I'm thinking otherwise between wholesale, online deposits and Polish zloty after the rate cut. How has the situation changed since COVID-19?

[Massimiliano Belingheri, executive]

Thank you, Antonio. Look, on volumes, I would say we are seeing a robust pipeline across many geographies. Even in Italy, which is the most penetrated market, we have been talking to customers at a much higher rate than we have seen in the past. And we expect volumes to continue to remain solid. The markets we were seeing it was a disproportional growth are probably Spain. We are seeing very strong growth in Poland. And clearly, in the smaller markets where we operate, we start with a low base. So I would say of the 3 major markets, Italy will grow at the slowest rate. But we need to bear in mind that with the VAT split payment removal, Italy will grow without growing, if you want to be, the customers or the real volumes of invoices by 20% starting from August onwards because we need to buy the invoices after they're due. So we start to be invoiced at the beginning of July. That will grow overall. So we are going to be looking at a very strong growth in this -- in all the markets with, I would say, more positive outlook in the 2, as I highlighted.

On push for liquidity in Italy, look, there hasn't been a plan at the moment to inject more money in the system directly by the government. All the measures that has been done by the government, you think about them, the [indiscernible] Cassa Integrazione, has been actually to use somebody else's balance sheet, to do those interventions. So the banks on one side and Cassa Depositi e Prestiti on the other, such is for the guaranteed. On the only measure that we mentioned that we hear about is the possibility that Cassa Depositi e Prestiti will reactivate the same mechanism they had last year, which is what I was referring to before, where the -- in this case, only the Comuni, the municipalities can apply for funding from Cassa Depositi e Prestiti, which then need to be repaid at year-end. Now it may.

The application process last time lasted, I think, a couple of months, and then the municipality needs to repay in December. That doesn't actually change, we think, materially the payment performance. And we actually doubt that a lot of municipalities will push for that, given that it creates, yes, an inflow of money, but then they needed to repay it at year-end will have much impact, frankly, on the overall situation. The number they've mentioned is EUR 12 billion. Last time only a very -- a small fraction of what was made available was actually disbursed. So I'm a bit skeptical of any real impact on it. In any case, covers only the municipalities, which is about 1/3, out of memory, of the overall public administration expenditure.

On the cost of funding, look, we have a number of initiatives to continue to optimize our cost of funding. We should also remember that the -- you see that we have actually a large portion of available funding, which is not drawn, debt funding where we pay commitment fee and where the spread we are charged is lower than the spread -- the average spread we have now. So the more we grow, the more we tap into those funding lines, the cheaper it is actually for us to fund our business. So that's the first effect.

And if you strip out the effect of the bond we have issued at the end of last year, which creates a base for a growing business, you see that actually the funding cost dynamics continue to be good. We still have to see the effect of the, one side, the reduction on the WIBOR. Second effect is we've started to collect deposits in Poland, as you know, has a lower cost of funding in our average cost of funding in zloty. We've actually cut -- we have a good collection and we have cut down rates because interest rates in the market has gone down massively, and so we should be able to see an improvement on that side, too. We can't access at the moment the ECB financing simply because our exposures are towards the public sector, not the private sector. But clearly, the fact that there is more liquidity in the market allows for the overall market yield and cost of funding for us also to benefiting directly from those measures.

The institutional bond market remains, I would say, fairly closed or quite expensive at the moment. It's also true that, as Emanuele pointed out before, we have a rating with a positive outlook. And given the performance of the business, we are quite hopeful we can be upgraded at a certain point in the next month, and so that would clearly put us in a different bracket, in the investment-grade bracket in terms of bond issuance. So when market is stabilized, I think it will have a positive effect. Important also, our rating is investment-grade on the deposits. So we might use that also to collect corporate deposits as needed.

[Operator]

The next question is from Simonetta Chiriotti with Mediobanca.

[Simonetta Chiriotti, analyst]

I have a question back to overcollection. So if I've understood well, DSO are not changing dramatically and should not change dramatically in the future. But I would like to understand better, first of all, if it is correct what I said on DSO. And secondly, on LPI overcollection, if the negative impact is just a matter of time or also of collection rate. And how much this is related to the lockdown and how much to the general situation, so if you expect an improvement on these trends going forward?

[Massimiliano Belingheri, executive]

Yes. Look, collection rate of LPIs remain actually good. It's just the amount that we have collected has not been as strong as we expected. We actually had a number of negotiations that were supposed to be concluded in March with, for instance, on central ministries and CBD shut down. So there was nobody to actually discuss and sign the contracts to have those transactions. So we are not seeing any particular reaction from the public administration. It is more complicated to get them to settle things. It is not their priority. And the first priority is actually to operate normally what they need to operate normally. So collection rate kind of remain good in terms of average recovery rate.

In terms of DSO, we have remained stable. If you look at the net over-recovery, remember, it's a component of 2 things. One is the recovery of LPI. The second is the risk of -- the rescheduling of the portfolio. So when we reach at a certain expected collection time, we'll be pricing originally. If we haven't collected, we take actually a provision on the revenue side, which keeps the IRR of the deal constant. And that has been high at the beginning of this year. So that's the second effect. Again, this will translate into more revenues in the future. So there's nothing, frankly, that we see as critical there. The lumpiness of the LPI, it's there, but that's part of the business model. We don't want to change that in order to actually hit a particular number per quarter. As we always said, it's important for us we actually keep discipline on the amount of collection and the level of over-recovery we have. And we see that as an area where we should get better news in the second half of the year once the lockdown is released.

[Operator]

Your next question is from Filippo Prini with Kepler.

[Filippo Prini, analyst]

Yes. I've got 3 questions, if I may. The first one is on your indication of plus 77% growth turnover in April. Very briefly, if you can get back to this figure and if you can share with us if there is higher than the first quarter contribution to the growth from Italy.

The second point is on your business in Poland. You mentioned basically that the reduction of a reference rate in the country and, related to that, also the reduction of the WIBOR. And if you can please confirm that none of the impact has been mirrored into both your return on asset and the cost of funding. So it's something that you will see from the second quarter this year.

And still on funding, if I may. I remember, if I'm not wrong, that you got a bond of EUR 200 million amount that is maturing this month or maybe next month. You mentioned that the restructuring market is not very available, to say the least, in this moment. So if you can share with us which are basically your strategy to refinance this amount that is maturing.

[Massimiliano Belingheri, executive]

Yes. Let me take the last one -- the last question first. On the bond maturing in June, it's EUR 200 million. We have plenty of liquidity. You have seen in our numbers. At the moment, the markets are not particularly open. We simply refinance with our existing resources. When markets open, then we'll refinance. That does not have a major impact on our NSFR, given also the fact that the bond is about to expire, and so that should actually, again, not have another revenue impact overall. On the WIBOR, we have the Polish assets -- so with the WIBOR assets -- sorry, the zloty assets are covered by the same amount of zloty liabilities. And that's, for instance, on an exchange-rate basis where we are fully hedged.

On an interest-rate basis, our assets are more at fixed rate than our liabilities. The liabilities are becoming -- are increasingly fixed-rate component because we have more deposits. But overall, we have a positive gearing to interest rates. So it's a reduction in interest rate. So a reduction in the WIBOR reduces some of the yield on our assets, for instance, the loans we have towards the hospitals or the municipalities, but there is a larger component of liabilities that have the nominal rate reduced. On top of that -- so that if you want on the stock of loans. On top of that, we believe that the reduction in WIBOR will not translate 1:1 reduction in yield charged to the customer. So spreads should actually widen compared to the WIBOR, and that's what we've actually put in our pricing model that constrains the decision of the management at the local level, and they're actually quite bullish that at that level of price we can continue to grow at a healthy clip. So for instance, in April, we had a good growth based on that.

In the first quarter, you don't really see the WIBOR effect. You don't see the WIBOR effect because, if you look at Page 6, the National Bank of Poland has cut the reference interest rate by 50 bps, which then has an impact on the WIBOR, on the 18th of March and then an additional 50 bps on the 9th of April, April being -- most of our funding is not a 1-month WIBOR anyway, but 3, 6 months and the same for the assets yield. It will take a few months for that to actually translate into that effect. So you haven't really seen any impact at the moment on the P&L of the business.

For the growth of Italy, in the first 4 months, we've grown at the same level as the first 3. There's been also delay on one deal, which has moved to May, otherwise -- which we are signing today. Otherwise, the growth would have been substantially higher. So most of the incremental growth has come actually from our international business.

[Operator]

This concludes our question-and-answer session. I would like to turn the conference back over to Max Belingheri for any closing remarks.

[Massimiliano Belingheri, executive]

Thank you for attending today. I wish you're all healthy and safe and look forward to talk to you soon. Thank you.