Sella Group: positive first-half results for 2023

• Net profit: € 76.2 million
• Net banking income: € 500.2 million
• Net inflows: € 2.6 billion
• Global deposits: € 52.4 billion
• Loans: € 10.9 billion
• Cet 1: 13.41% - Total Capital Ratio: 15.24%.
• LCR: 197.75% - NSFR: 127.72%.
• Cost to Income: 65.3%.
• Roe: 14.2%.
• Customers (gross of Hype): 2.9 million
• Team Sella: over 6,000 people

The Sella group closed the first half of 2023 with positive and growing results in the various business segments, confirming the effectiveness of its strategy and the good diversification of its revenue sources. In a general economic scenario still marked by traits of uncertainty and the consequences of international tensions, the Group recorded further growth in net banking income, due to increase in global funding, loans and almost all volumes. The positive performance, also witnessed by the rise in the number of customers and increase in the leading market shares, confirms the Group's ability to support families and businesses with effective banking and financial solutions, thus providing answers to their advisory and asset management needs. The Group also continued to consolidate new business areas based on technological and digital innovation while fostering an open and sustainable financial ecosystem.

Group results 
Overall results as of 30 June 2023, approved today by the Board of Directors of the parent company Banca Sella Holding, closed with a net profit worth € 76.2 million, up from € 61.5 million in the same period last year.

In addition to the high-grade overall performance, the result also mirrored the non-recurring component arising from the strategic partnership with Sesa Group in open finance services, which led to the creation of two companies: Nivola, controlled through Centrico and BDY, and 49% owned by Centrico itself, resulting from the transfer of a business unit. Without taking this transaction into account, net profit was € 60 million, which is, from an industrial perspective, higher than last year's, as evidenced by the growth in operating income of around € 172.4 million (+38% compared to the same period in 2022) thanks to a rise in the net banking income exceeding that of costs. Compared to the first half of 2022, higher cost of credit risk and some prudential write-downs on equity investments took place, despite the positive results they achieved last year.

Results as of 30th June 2023 do not take into account any potential impacts of the Legislative Decree approved by the Council of Ministers on Monday, August 7th, as the final text has not yet been published in the Official Gazette, and must be converted into law to become effective. Effects of the same will be considered in the 2023 Annual Report.

Significant growth in net banking income, which increased by 19.2% to €500.2 million, allowing the Group to continue its investments, development initiatives and employment growth, consistent with its Strategic Plan. The net interest income increased by 65%, mainly due to the commercial component and interest rate dynamics, while the net revenues from services rose by 7.6%. The Net income from financial activities reduced by 61.2%, mainly due to last year's non-recurring transactions involving the sale of securities and tax receivables to third parties. 

Global net inflows at market value as of 30 June 2023 stood at € 52.4 billion, up 7.8% from 48.6 billion euros at the end of 2022. Customer confidence reflects in the excellent result of global net inflows standing at the positive value of € 2.6 billion. The half-year was characterised by strong growth in indirect deposits, which reached € 36.1 billion (+12.8%), coming from yields expressed by the bond market, while direct deposits slightly fell to € 16.4 billion (-1.6%). Loans in support of household and corporate activities, net of repos, amounted to € 10.9 billion (+3.4%).

Credit quality remained at an optimal level. The annualised cost of credit risk is 35 bps (was 37 bps at the end of 2022). The net Npl ratio is 1.9% (was 1.8%), and the gross Npl ratio is 3.3% (was 3.5%). The coverage ratio on impaired loans is 44% (was 49.5%), while the coverage ratio on non-performing loans is 62.8% (was 65.7%), mainly due to some sales of non-performing loans with a high coverage ratio. The Texas Ratio improved to 24.7% (was 27.2%).

Soundness and liquidity
In the first six months of the year, the Sella Group also confirmed its sound capital position, well above the required standards, with further growth in ratios: the Cet1 ratio stood at 13.41%, and the Total Capital Ratio at 15.24% (they were 13.21% and 15.12% at the end of 2022). Well above the required limits also performed Liquidity ratios: the LCR ratio nearly approached 200% at 197.75%, while the NSFR ratio was 127.72% (the minimum required level for both is 100%).

Trends in business sectors 
The high-grade quality half-year result was supported by all the leading sectors in which the Group is engaged and diversification of revenue sources. In particular, investment services made a significant contribution, generating revenue of € 91.8 million (essentially in line with June 2022, -0.4%), confirming the quality of advisory activities and the offer of a complete range of asset management solutions. Concerning payment systems, total transacted volumes of acquiring and issuing services grew by 22.5%, with a net banking income up 12% to € 52.6 million, also due to an increase in POS (+26.2%) and e-commerce (+12%) transactions. Corporate & Investment Banking revenues grew by 112% to € 6.5 million. Finance recorded a significant margin performance of € 56 million, down, however, from the same period last year (-43%), characterised by very favourable conditions, such as high volatility, lower interest rates, the significant contribution of inflation to the return on securities portfolios and capital gains from the sale of securities. Revenues from new business rose by 10% to € 40 million, mainly due to corporate and investment banking, open payment and platform services.

Sustainability 
In the first half of 2023, the Group successfully issued its first green bond, which attracted a total demand of € 100 million, double the initial offer, and introduced a series of ESG products and services, including financing aimed at supporting the sustainable transition processes of companies, thus rewarding them for achieving specific goals. The Group relentlessly pursued its commitment to environmental sustainability: a car park equipped with a photovoltaic system for a total of 632 panels was built at the Group headquarters in Biella, with the total systems standing at 20, and also installed new charging stations for electric vehicles, bringing to 33 the total charging points at its headquarters throughout Italy.

Customers and Employees 
The Group's total number of customers further surged by 7% to 1.27 million, net of those from the fintech Hype held in a joint venture with illimity bank. The number saw a staggering 8% increase to 2.9 million, gross of Hype customers. The Sella Team, which includes both employees and partners, boasts a headcount of over 6,000 individuals.

Investments
Investments to support the strategic plan amounted to € 45.6 million, net of the real estate component. To effectively support the several development initiatives and the increase in staff, operating costs rose by 11%. Despite these significant investments, the cost-to-income ratio improved to 65.3% (it was 75.2%at the end of 2022).

The results of Banca Sella
The high-grade overall results encompass the performance of Banca Sella. As of June 30th, the bank recorded a net profit of € 89 million, compared to € 48.1 million in the same period last year. This further validates, even compared to the complex scenario, Banca Sella's service model based on specialised advisory and financial asset management, and products and services with a high grade of innovation and positive impact, to provide appropriate responses to the needs of families and businesses thus supporting the economy of the areas in which it operates. As said, results are not inclusive of any potential impacts deriving from the Legislative Decree recently approved by the Council of Ministers on Monday, August 7th.

In the first half of the year, the Roe stood at 20.9% (was 11.9% in June 2022). The accustomed capital soundness of Banca Sella: the group's commercial bank, which holds the majority of customer deposits, further strengthened with a Cet1 ratio of 19.12% and a Total Capital Ratio of 21.49%. (They were 18.63% and 21.16% at the end of 2022). Liquidity ratios are well above the required limits, with an LCR of 225% and NSFR of 146.2% (the required threshold is 100% for both).

Net banking income was significant, growing by 32.5% to € 320 million, thanks to increased lending and market rate dynamics. Concerning net revenues from services, income from payment systems, both traditional and electronic, foreign, and in ancillary credit fees significantly grew. Income from investment services remained noteworthy, in line with last year's result. Net income from financial activities decreased (-76.1% as last year's figure was largely affected by specific transactions involving the sale of securities and tax credits to third parties).

Compared to the end of 2022, loans to support household and corporate activities increased by 2.5% to € 9.3 billion. Credit quality remained at outstanding levels, as shown by the relevant ratios: the annualised cost of credit risk was 29 bps (was 19 bps in the first half of 2022 and 22 bps at year-end). The bank's Net Npl Ratio was 1.8% (was 1.7% at end-2022), and Gross Npl Ratio was 2.9% (was 3.1%). The Texas Ratio index is 27.1% (was 30.8%). 

Global inflows at market value grew by 5.9 % year-on-year to € 33.4 billion. Direct deposits grew by 2% to € 13.5 billion, while the cumulative global net inflows for the half-year were positive at € 1.3 billion. 

Banca Patrimoni Sella & C.
Banca Patrimoni Sella & C., which specialises in the management and administration of the assets of private and institutional customers, closed the first half of 2023 with a net profit worth € 14.7 million, up 65.2% from € 8.9 million in the same period last year. Assets under management stood at € 20.2 billion, up 10.7% compared to the end of 2022. Also worth highlighting is the positive performance of progressive net inflows of € 1.3 billion in the first half of the year, thanks in particular to the significant increase in qualified net inflows of more than € 750 million, which testifies to the growing interest of customers in advisory and asset management products and services. Results were affected by both the positive trend of fee income, following the bank's further growth in size, and the positive contribution of net interest income and profits from trading in the proprietary securities portfolio. 
Cet 1 and Total Capital Ratio were both 13.06% (they were both 11.88% at the end of 2022).

Fabrick and the fintech ecosystem

The Sella group development in open finance and fintech continues, propelled by the activities of its specialised company Fabrick, its subsidiaries (Axerve, dpixel, Codd&Date) and the management of the Fintech District community, which rounded the first half of 2023 with total net revenues of worth € 25.3 million, up 17.5% compared to the same period last year. The number of customers also increased, to 364 connected counterparties leading to a rise in API calls on the platform to 365 million per month. Over the period, Fabrick completed three strategic transactions with Mastercard, Reale Group and Judopay to boost its growth and boost its growth in the international market. The Fintech District community continues to thrive to over 270 fintech companies.Axerve, the payment acceptance expert for all physical and digital channels, achieved a net revenue of € 13.9 million (+19%) In H1 2023, Compared to the same period in 2022, the volume of POS and e-commerce transactions grew by 25.4% to €11.9 billion.