Banca IFIS SpA
MIL:IF
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
15.51
23.1
|
| Price Target |
|
We'll email you a reminder when the closing price reaches EUR.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Banca IFIS SpA
Earnings Call Analysis
Q1-2024 Analysis
Banca IFIS SpA
Banca IFIS opened 2024 on a positive note, reporting a net income of EUR 47 million for the first quarter. This reflects significant growth, up 33% quarter-on-quarter and a modest 3% year-on-year. The strong performance can be attributed to resilient revenue streams in commercial banking, non-performing loans (NPLs), and proprietary finance. The company also noted favorable trading conditions contributing EUR 4.7 million in trading income, a figure that may recur in the upcoming quarters depending on market conditions.
Total net revenues for the quarter stood at EUR 185 million. Breaking it down, commercial banking was robust, generating EUR 89 million, a slight increase from EUR 86 million in the previous quarter. The NPL revenue remained steady at EUR 74 million, up from EUR 69 million year-on-year. These figures underline the bank's effective pricing discipline, which has helped offset rising funding costs that have emerged in the current economic climate.
The average cost of funding was recorded at 3.86%, with expectations for 2024 to remain slightly below 4%. This cautious stabilization comes as the bank transitions away from previously cheaper retail deposits towards more expensive senior bonds. The management indicated that they do not foresee a reduction in costs imminently, primarily due to ongoing adjustments in their funding strategy.
Banca IFIS confirmed a dividend payout of EUR 0.90 per share, totaling EUR 47 million, scheduled for May 22. This reconfirms the bank's commitment to returning value to shareholders amidst its strategic growth initiatives. The earnings guidance for 2024 stands at EUR 160 million, reinforcing confidence in the bank's financial health and growth trajectory.
On the loan front, while the demand is expected to experience low single-digit growth, the bank maintains a healthy pricing discipline, with a 14 basis point increase in spreads year-on-year. The bank's focus on small-ticket loans has shown resilience amid market contractions, especially in the SME segment of factoring, which displayed stable turnover but reduced new loan volumes.
Banca IFIS has successfully managed operational costs, reporting approximately EUR 100 million per quarter. The personnel costs should average around EUR 170 million, incorporating the gradual impact of new labor regulations. A conservative approach to cost management is evident as they navigate through inflationary pressures while investing in growth areas such as IT improvements.
Looking ahead, Banca IFIS remains cautiously optimistic about its growth strategy, aiming for a sustained net profit of EUR 160 million for 2024. The focus will continue to be on strong operational performance and diversified revenue streams. The bank's commitment to improving its risk management and solid asset quality is reassuring, particularly in a fluctuating economic landscape. The stable collection rates from its NPL business further support this outlook.
You don't have any saved screeners yet
Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Banca IFIS First Quarter 2024 Results. [Operator Instructions]At this time, I would like to turn the conference over to Frederik Geertman, CEO of Banca IFIS. Please go ahead.
Good afternoon, everybody, and thank you for joining our call of the first quarter 2024. We -- I will briefly go through the presentation, and then we'll have some time for Q&A as soon as we're done, and we'll try the effort to keep the presentation part fairly brief so that you have time for questions.We present a net income of EUR 47 million, plus 33% Q-on-Q and plus 3% year-on-year. Based on quite resilient revenues in commercial banking, NPLs and proprietary finance, we are happy to be able to say that we are delivering, as you will see later when we get into the results on offsetting the cost of funding increase. We have some positive impacts of what we call non-commercial items. First of all, EUR 4.7 million trading income benefiting from the rate scenario. And this is partially recurring, I would say, meaning that also in the coming quarters, we expect to have a benefit from that. But that depends, obviously, on market conditions, and we had a one-off that was EUR 3 million due to disposal of an equity stake from the restructuring of the legacy NPL position.On asset quality, we maintain our positive risk return performance of the loan book, and it extends into this year.Happy to say we obtained the AA rating from MSCI, up from A, reflecting the commitment of our controlling shareholder on the ESG agenda. We are quite committed to that, and it's really encouraging to see that we received the confirmation. We report a very solid financial position. We have EUR 2.5 billion of available cash after having repaid EUR 1.25 billion TLTRO, which we did in 2 instances in December '23 and in March '24. CET1 ratio very close to 15%, 14.98%. That's excluding the first quarter '24 net income that's not computed in there. Dividends, EUR 47 million, EUR 0.90 per share will be paid on May 22, and that's obviously in addition to what was paid in advance on November.Going to Page 5, revenues. Net revenues at EUR 185 million. The first quarter breakdown, commercial banking, EUR 89 million. That was EUR 86 million in the fourth quarter. It was EUR 88 million in the first quarter of '23. Strong commercial performance. And as you will see later some significant continued pricing discipline that's helping us to more than offset the cost of funding increase. NPL revenue is resilient, EUR 74 million. It was EUR 69 million last year despite inflation in the rate scenario. The first quarter includes EUR 5.7 million from Revalea. Non-core and G&S, EUR 22 million, confirming a recurrent and stable contribution to revenues. And we had EUR 14 million in the fourth quarter of '23, EUR 19 million in the first quarter of '23. These revenues include some trading gains as we said, of about EUR 7 million, mostly disposal of government bonds, also some other trading activity. We believe that we are quite successful in offsetting the cost of funding increase, which was an item that emerged in our previous calls.Page 6, commercial activity. Factoring turnover is stable. We maintain a very healthy pricing discipline, 14 basis points up year-on-year on the spread. Turnover. Turnover, as we said, more or less stable, but the loans are up 4.3% year-on-year versus 0.2% of the market, reflecting our focus on slightly more persistent position. So slightly longer duration, no delays, just slightly longer durations, helping our stocks to remain up a bit and contributing to the margin. Leasing and equipment. The market for leasing went down quite significantly. We see some delay on CapEx decisions of SMEs, right? Also, as you know, there is always a little bit of effect of tax benefits, which led to the spike that you see in the fourth quarter of '23, right, that obviously gave us a significant boost that being long-term lending, those volumes are now in the bank. So we have minus 11% year-on-year on new loans. The market did minus 34.9%. Then we have the automotive parts, new leasing, plus 6% year-on-year, whilst maintaining a focus on prices, on premium luxury segments. And this is very important to note, with a significant preference of loans where we have remarketing agreements in place. So when the leasing expires, we resell the cars at a given price. And this is true for the vast majority of the portfolio. So very low-risk business in terms of residual value of the assets. First quarter automotive lease at 3.92%, another 13 basis points up year-on-year.Page 7, NPLs. So excluding Revalea, we keep our roughly EUR 100 million quarterly cash collection. You've grown use to that. We -- this quarter is no exception. The advantages of having a very fragmented, very well modeled and very industrial NPL business, which gives a lot of predictability to how the portfolios behave. I always remind the participants to take a look at the Annex, where you will see on the pages dedicated to NPLs, that the actual performance continues to exceed the model performance and the models obviously are the ones we use when we purchase portfolios. Split for extrajudicial and judicial recovery, the revenues, you see that we have, in the first quarter, 21% -- EUR 21 million extrajudicial and EUR 52 million judicial. These data exclude Revalea.Page 8, costs, other operating costs versus fourth quarter of '23. So EUR 3 million less due to savings on lawyers, information providers and traveling expenses, EUR 3 million less due to the seasonality of marketing and investments -- marketing investments and expenses. This includes roughly EUR 8 million of IT expenses, which remain substantially stable. You will recall maybe from our business plan that we have quite healthy and quite a significant IT spend and investment plan throughout our business plan. We're happy to report, in this case, I consider it a success that we are spending in line with the business plan. So the projects are being executed as planned. First quarter '24, remember includes EUR 3.8 million operating costs from Revalea that we didn't have, obviously, last year.Taking you to Page 9, asset quality. Loan loss provisions at EUR 9 million, fourth quarter of '23, that was EUR 22 million, and coverage ratios further increasing. You can see that on NPLs, we have 79%, on UTPs 46% and on past dues 7%, total up 2 percentage points to 45% coverage. If we go to the NPE ratios, you can see that the ratios are slightly up. The actual stock is stable, substantially stable. The reasons the ratios go slightly up is that, the denominator where the loans are, due to seasonality, has a slight contraction. So that leads the ratio to go slightly up. We expect to carry out the disposal of certain NPL positions in the next quarter. So we expect these to further improve these ratios.And just a few words on the loans versus the Italian public health system. You can see that we have 1 percentage point in gross NPEs and 1.1 percentage points in net NPEs. A little bit of history there. Two years ago, IFIS classified most of the loans towards the Italian health system consistently with the new definition of default and consistently with the written instructions received by Bank of Italy to the banks. And that led to a substantial increase in past due in our numbers. Page -- on Page 9, you see the breakdown, right? It's 1 percentage point, both gross and net, and that's down from the initial number from 2 years ago, which was a bit higher. We have collected these credits, and we are gradually reducing and eliminating this past due stock. So this is a runoff portfolio that's currently being collected and we don't have any issues with respect to collection or payment times. And we certainly do not believe that we have any classification issue or that we could have any further impact on the new definition of default or the instructions that we received from Bank of Italy because IFIS 2 years ago classified everything.Down to Page 10. You always ask us for a bit of outlook. How is the risk environment looking in the country? We still don't see macro credit risk materializing in the portfolio. I think this is in line with what you hear from other banks. Payment days in factoring, substantially flat, lower than they were 2 years ago. Stage 1 and Stage 2 loans stable. We cover Stage 2 loans at 8.1%. Rating migration in the book roughly balanced. You can see we have 2 percentage points differences, but I would argue that, that is a little bit of statistical variety. I don't think that is a meaningful difference. We have 12% upgrade and 14% downgrades. Probability of default slightly decreasing in the book consistent with our underwriting policies where we try, obviously, to serve those customers with the highest rating, the best rating, I should say.Page 11, ESG. On April 19, we received the MSCI upgrade. Our overall industry adjusted score increased from 7.1 to 8.2 points. Very solid result. I would argue, especially on the factors that weigh a bit more, right? So human capital, corporate governance and corporate behavior, where we have a nice result and especially human capital development looks -- compared to the industry, very, very solid. And from experience, I can say that this reflects actually how we deal with the IFIS people.Page 12, funding. So a little bit of update on what's going on, even though I think you already saw that it's hardly an issue. So we have roughly EUR 0.79 billion TLTRO which expires in September. We will probably pay it back before in the windows that we have earlier. And we have EUR 400 million senior bond expiring in June. What have we done? The -- I would add your attention to the fact that we are now at EUR 1.25 billion prepayment of the TLTRO that's already behind us. We've worked on the securitization. We've issued a senior bond in February. And we had a very nice increase in retail deposits, both through rate policy and through a very significant brand and marketing effectiveness strategy and digital marketing strategy that leads us to have the confirmation that when we want to increase the retail deposits, we can do that in a fairly short time frame. And we also have some EUR 200 million of proprietary portfolio maturing before September. So overall, all funding actions completed well in advance. We're extremely liquid now. And we have to do roughly EUR 800 million of potential repos with institutional counterparties that we are slowly starting to work on. After the full TLTRO repayment, we expect available cash that's including the counterbalancing capacity to be north of EUR 1.5 billion.Page 13, capital, 14.98%. No very relevant items there. A little bit of impact, positive impact from risk-weighted assets decrease given the usual seasonality and a little bit of decrease due to the regulatory partial removal of transitional filters of IFRS 9 provisions.I would stop the presentation here. You can see that on Page 14, we have a little bit more detail on the P&L, but I won't go through it, given that I gave you the actual points. And I would hand over to you for any questions you might have. Thank you.
[Operator Instructions] The first question is from Fabrizio Bernardi from Intermonte.
I have a few questions on, let's say, the macro trends. I would like to see, if you see -- to understand if you see a bit of a slowdown in terms of the economic scenario in terms of loans evolution. And that said, if you can provide some, let's say, granularity on the loan loss provision that you made in the first quarter?Then I have a question in general terms about the NPL market. We have seen some peers getting out of the business. It seems that Mediobanca is out, that illimity is going to exit. And there are a few other peers that are willing to merge in order to probably get some scale and cut cost. So I would like to understand what is your strategy in this business in order to face especially new regulation about provisioning on NPLs.
Fabrizio, I'll take them in the order in which you gave them to me. So loan demand and macro output. So the economy, as you know, from the statistics, from the budget office, et cetera, in Italy is growing, right, slightly growing, and Italy keeps comparing favorably to the other markets in Europe. So we have an environment, which is not in strong growth, but it's quite -- holding up quite nicely. In this environment, we have corporate loan stock down something like 4.6% year-on-year, right? I think what you're seeing is the digestion, if you will, right, of all the long-term lending that was given under the COVID policies with public guarantees, right? And then various segments do differently. But you see the overall loan stock contracting, but that's not connected to a contraction of the economy, and we don't see a very significant slowdown in the economy.So if you take a look at our businesses, first of all, factoring, right? Turnover is roughly flat, but some growth in volumes given our focus, as I mentioned in the presentation, on slightly more persistent loans. Leasing, yes, contraction. And in that area, although it's really a bit hard to see what is the consequence of timing given the bumper we had in the fourth quarter of '22, right, that was boosted by tax incentives and what is actual slowdown in CapEx investments by the economy. We would see, however, slightly less equipment sales and therefore, slightly less leasing loan demand for us, right? In automotive leasing, we grew nicely, plus 6%, the market did 3%. That's really commercial effectiveness and some good commercial performance.And finally, on pharmacy lending, we see a continued demand, but we also see a little bit of optimization on the client side of their costs. So they will, in some cases, refinance their operations at different rates, lower rates if they can get a better offer from the competition. And if we can, we follow, if we think it's unwise, we don't. But we are underwriting a bit more maybe than what's apparent from the growth in the stock because we're having some substitution there.LLPs. So it's a fairly small number in the quarter, looking at EUR 9 million. And in terms of where it's going, it's granularity, right? So the largest single one is about EUR 1.4 million of provisions. The second one is EUR 1.2 million. The third one is EUR 0.9 million. So -- and then they become really small, right? It becomes very fragmented. So no little major issues encountered, no -- not even sectoral issues, I could say. I think it is more idiosyncratic to single companies. If they're a little bit more highly leveraged and they have slightly lower margins, right, then you may get to maybe a restructuring. But nothing that I could say is connected to the economy clearly.NPR strategy, yes. So you mentioned Mediobanca exiting, that was good news for us because we bought the business, and it's performing as we hoped. I think that different players follow different strategies. First of all, you have to make a distinction because there are mergers going on in the market right now or being discussed there in the press, but please separate servicing businesses from proprietary NPL businesses. We have always focused on small tickets, unsecured, fragmented NPLs. And we keep active in that specific segment. Revalea gave us the chance to be quite laid back about additional purchases. It doesn't mean we're not doing them. It means we will do them if we find the conditions particularly attractive. And otherwise, we know that our targets for the plan have already been met in terms of NPL purchases. So we're taking quite a laid back approach. The secondary market is also still present. I saw a few transactions there. So if we find attractive risk return opportunities, we will continue buying.And in terms of what you mentioned, the regulatory effects, we will address this in the new business plan. We're looking at some structures that will allow us to remain in the business and remain as an investor and remain as a servicer, probably with structures that will see the presence of co-investors. So if that materializes, then what you should expect is the contribution of new portfolios having slightly lower revenues, also slightly lower costs because of some profit sharing, obviously, with co-investors, but a very great capital efficiency. So depending on how you look at it, it could be slightly favorable even though in terms of the volumes, right, that you need to -- if you have co-investors, the volumes that you need, obviously, to intermediate need to increase a little bit. So we'll see how that develops. In any case, it is a market which is a specific niche. It's not the overall NPL market is connected to consumer credit. It's connected to mass market. It has its own dynamic. And as you see from the very stable and resilient cash collection, I won't even go to revenues, right, the business is quite solid. But in answer to what we will do in the next years, I would say that we will address this in '25, '26, '27 when we present a new business plan. I hope I answered your question.
Yes, you did. Sorry, maybe another question. There is a bank today that is in trouble and it's a little bit confusing to understand why in the sense that it seems that the RWA methodology is under investigation by the Bank of Italy. What I'm asking is, how much are you comfortable with your regulatory approach in terms of RWA weightings?Then the second question. So you mentioned the small tickets in factoring, but if I look at Slide 19, more than 1/2 of, let's say, loan revenues are coming from medium to large clients. So maybe you can give us some color about this?
Okay. So normally, we don't comment on competitors, and we won't deviate from this time. I will -- I thought I'd addressed it when I presented the slides on the NPE ratios, but I will -- for clarity, I will address it again. We are 100% comfortable that we are in line and fully compliant with the new definition of default and the written indications that Bank of Italy gave to the market. Two years ago, we classified most of these loans into past due. And subsequently, we digested this portfolio collecting the cash and placing it basically in runoff. So you saw 2 years ago already, the spike in past due, and you saw it developing over time to where it is now, and it will further reduce before the end of the year. We don't believe we could therefore have any classification issue or further impact from the new definition of default.With respect to factoring, we are a small tickets factoring business, meaning that we have basically an SME clientele, okay? And the breakdown that you see on Page 19 is entirely consistent with this because if you took the client business of the factoring operations of the large Italian banks, you will see that they are almost exclusively on large. So having 41% of revenues coming from small companies, meaning less than EUR 10 million turnovers and another EUR 23 million from medium companies, which have less than EUR 50 million turnover is, in our opinion, totally consistent with being a small ticket factoring player. It doesn't get much smaller than this. Okay?
The next question is from Luigi Tramontana of Banca Akros.
Two questions on your funding plan that is already completed. You are really very, very liquid at the moment. It seems that you have some excess liquidity. Can we assume that your current funding cost at almost 3.9%? It can be considered as a peak and we are going to see a progressive reduction in the coming quarters, given also the expectations regarding the official interest rates. And related to that, can you please remind us, your sensitivity to a reduction of, let's say, 50 bps of the short-term interest rates?
Yes, Luigi. So average cost of funding, we are experiencing a gradual stabilization, okay? So we were at 3.86% total aggregate cost of funding in the first quarter. And that already includes the larger part of the substitution of the older nice retail deposits that were so cheap, right, and also includes obviously the issuance of senior bonds, right, that we did in September, and we did again in February that were quite expensive, right? And so, I mentioned stabilization because I think that we're nearing the peak. We believe the average cost of funding in 2024 will remain slightly below 4%, right? And I'm not sure we can already speak about the reduction, right? I would not expect that because we still have some substitution effect going on, right, of the old stuff that was cheap.I would also, in the light of this, urge you to take a look at Page 32, right, where you see the bank has -- it's in the Annex, where I think much of the more interesting little issues are hidden. You can see that the margin has been quite nicely defended throughout the cycle, right? So it is true that we see this gradual increase of funding cost. It is also true that the bank appears to be able commercially whilst having healthy volumes, right, to maintain its spreads.With respect to your question on sensitivity, yes, we -- so give me the quantitative answer, which is probably what you're looking for, but I should qualify that a little bit. So roughly, you asked for a 50 basis points impact, right? So if we assume a step change of 50 basis points present for a whole year, yes, then the impact would be around EUR 10 million of lower revenues roughly. A step change that is valued for whole year is, it doesn't happen, right? So it's a highly theoretical answer. What I will say is that, the guidance that we gave you for full year net profit embeds 3 rate cuts of 0.25 point each. I don't know if that is right. And none of us do, right? But we do think it is a reasonable assumption. I hope this clarifies it a bit.
My next question is of Manuela Meroni from Intesa Sanpaolo.
The first one is on your guidance. You reiterated your guidance of EUR 160 million net profit in 2024. I'm wondering if you feel confident in providing also guidance for 2025. What could prevent you from reporting a net income in 2025 in line with 2024, so close to EUR 160 million?And the second question is on your dividend policy. Can we assume that you are going to pay EUR 110 million of dividend also this year?Third question is on the cost of funding. You have just said that you expect the cost of funding below 4% at the end of the year. Just to understand, you are mentioning the exit point or this is an average? Because if I look at the first quarter, you are at EUR 386 million, so it would imply approximately 100% higher cost of funding. So just wondering to understand if this is an average of 2024 or just the end of 2024.And then the final question is on the retail deposits in the first quarter. You increased your retail deposit by EUR 350 million. What were the growth drivers? And is there any form of concentration in the funding that you have done? And do you expect to further increase your customer deposits going forward?
Yes, Manuela. So in terms of guidance, yes, we have a guidance out of EUR 160 million for this year. We don't have actually targets for 2025, right? So this is the third year of the plan, and we want to execute it, finish it before communicating targets for the next year. So we're not giving guidance for the years after. Let's see what could impact. We can talk about that more, maybe in qualitative terms. Well, rates, obviously, we mentioned the sensitivity. So the speed and the impact of the size, right, of the reduction of rates, if you believe that, that's going to happen. Economic activity, we keep seeing this very low cost of risk. And obviously, we have a -- some form of insurance in the overlays, right, in case things would go badly. But it depends, right, how the risks go? We always have a little bit of regulatory uncertainty, right? So pluses and minus, I think we are in good shape to deliver a good return. But I would rather not extend into giving specific targets for 2025.Overall, I think you should regard this bank as a bank that has a short book, fragmented risk, a lot of protection on its assets, both on the leasing side and on the long-term lending side and on the factoring side, which, as you know, is usually has the double evaluation of credit risk of both the debtor and the client. Bank has a diversified business, a bank where usually, when the environment changes, the 1 business might do a bit better, but that would -- that might be compensated by another one doing a bit worse and the other way around. So diversification, right, helps a lot. So we've worked a lot on improving operating performance. And I have no assumptions or reasons to believe that this would, in any way, shape or form a completely collapse. So that's why I think we're in good shape to remain a bank that delivers a good return to its shareholders, which leads me to dividends, your second question.So if we make the guidance, right? So in the scenario of EUR 160 million net income and without changes to the dividend policy, we would distribute EUR 110 million. There's absolutely no change envisaged in the dividend policy. So we -- you can assume, right, that if the guidance is met, and the first quarter would bring us quite a long way in that direction. If the guidance is met, then we will distribute EUR 110 million.Your question of -- on cost of funding, yes, you're right. I'm sorry, I should have clarified that maybe the slightly -- the figure around 4%, right, slightly below 4% that I mentioned, was meant as annual average cost of funding, right?And finally, deposit concentration. So that was a very nice and encouraging experience that we had in Q4 and Q1 is that, when we want, right, we can have a fairly fast and sizable increase in terms of deposits. We didn't do anything on concentration on changing the small tickets focus. So what is in there is no significant increase in corporate deposits or anything that is different from what you know. So it's small tickets, retail deposits, average ticket size between EUR 20,000 and EUR 30,000. It's all commercial, and it's all small tickets retail. We don't plan to increase retail funding further. If you -- I don't know if you're one of those that track the offers of the banks, but you've seen that the last weeks, many banks have started decreasing the retail offers, right? And we are no exception. We did the same. So we reduced -- we are reducing the offered rates. And we don't expect to increase our retail funding base further. We have no reason for it.We're very, very liquid, as you saw, but we like it that way because we didn't want any surprises given the size of the TLTRO repayment and the bond expiring, we didn't want any surprises during this year. So see it as a cost of insurance, right, against unforeseen events. The bank is managed in this way in line with the indications of the controlling shareholder who wishes a long-term, sustainable, healthy business and will definitely prioritize liquidity and solidity above short-term results, right? So we are aware, we are quite liquid, but it was the thing to do, given the size of the repayments we had to make. I hope I answered your questions, Manuela.
The next question is from Davide Giuliano from Equita.
I have just 3 of them. The first one is, can you give us an update on loan demand from your customer? Is it reasonable to expect an increase in loans in 2024 in the low single-digit area?And the second one on factoring and also on leasing, the spread increased by 14 and 16 bps year-on-year. Can you give us an update on the sustainability of the spread increase and the repricing strategies also in terms of fees?And the third one on cost, the performance seems to me to be consistent with the guidance of approximately EUR 100 million per quarter. I also saw that you expensed around EUR 8 million for IT costs. I was wondering how much of these costs are expected in the coming quarters? And is it correct to still expect approximately EUR 400 million per year? How much do you expect finally in terms of personnel costs?
Okay. So loan volumes, I answered it earlier and I went into the business breakdown, so I won't go into it again. I think it will become a bit more -- a bit too analytical. I think what you're looking for is a sense of how loan demand and our book will develop in the coming months. It's -- I will say this, we're not seeing an impact of significant contraction in the economy. We're not expecting a significant decrease of loan demand. What we might -- what we would like, right, is a couple of percentage points growth of our book. So that's our scenario. It depends on our commercial effectiveness. It depends on the market, right? And we just need to execute that if we can. So that's a little bit of entrepreneurial risk, if you will. So no wild swings in demand expected and some growth as our ambition.In terms of spread increase, well, that's 1 element, right? So if we were to really chase volumes, right, we wouldn't worry about price. But we do worry about price because we are a bank, we're a specialty finance player that wants to do business where there's margin. So you saw that both on leasing and on factoring, we increased 14 basis points on the spreads. Is this sustainable? Yes. That is my strong opinion. It's connected to distribution capacity. It's connected to specialization. It's connected to service levels. It's connected to digitalization. It's connected to time to yes, right? So how much time before you reply to a loan demand. And all these things in the last years have moved for us in the right direction.Quality of the digital interfaces, I'm looking at the COO now that has worked very diligently with his team on those things. So if you add those things up, I think this bank in the businesses where it is, is delivering superior service and improving service levels. Clients are with us not because we inherited them because the bank is not 200 years old. But because they were acquired through quality. And therefore, an increase in price, in my opinion, is not a short-term cannibalizing move. It is the expression of what we've done over time, and we've been able to do it even in the face of increasing rates. And actually, I complement my -- I want to complement both the network and the people who do the platforms because this is an expression in our opinion of the value of what we do.You had a question on costs, I believe. You asked if we were looking at roughly EUR 100 million per quarter, right, which is I think what I mentioned in the last call, you remembered correctly, yes, I confirm that. Maybe slightly higher, right, but not very material. Cost of personnel of that would be, once again, you're asking for very specific numbers, but it should be around EUR 170 million, right? And that includes the gradual impact of the new labor contract. So I'll give you the details, which I'm sure you can appreciate. So the overall aggregate impact, once it's all in the numbers, which will be 2026, right, of the new labor contract is EUR 7 million. We had the first 2 in 2023 -- 2022 -- sorry, 2023. In 2024, it will reach EUR 4.7 million. In 2025, it will reach EUR 6.2 million. And in 2026, it will reach EUR 7 million, right? So that's the gradual increase. It's not cumulative, of course. It's already cumulative, right? So that will be the final impact in 2026 of the new labor contract. So slightly more maybe than EUR 100 million per quarter and of that EUR 170 million personnel, including the impact of the new labor contract risk for this year would be close to EUR 5 million, EUR 4.7 million.Were those your questions?
No, it was already answered.
[Operator Instructions] Mr. Frederik Geertman, there are no more questions registered at this time.
So thank you very much. We hope to have you all again on the next call for Q2. And thanks for your time and attention. And, of course, our team is available, especially Martino Da Rio, the Investor Relator, for any questions that you might have. And so, they can also be passed through regular channels. In the meantime, I would give -- wish you all a good afternoon. I'm sure you might have additional costs. So I'll stop this one and leave you to your remaining activities. Thank you very much for your time and attention.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.