Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue reached EUR6.2 billion in the first half of 2024, up 3% year on year or 7% on an underlying basis.
- Adjusted EBIT in the first half of 2024 is EUR1.5 billion, up 14% on an underlying basis.
- Net profit adjusted over EUR1 billion, also up 14% on an underlying basis.
- Strong performance in mail and parcel services, with double-digit parcel volume growth.
- Postepay services continued to grow double digits, driven by increased card and digital payments.
Negative Points
- Non-HR costs increased by 7% to EUR2.1 billion in the first half of 2024.
- Mail volume decline related to lower margin and recorded items.
- Higher distribution network costs impacting financial services' operating profitability.
- The insurance guarantee fund contribution of EUR74 million will impact net income.
- Potential margin compression in new life insurance products due to promotional features.
Q & A Highlights
Q: Can you quantify the swap component in the increase in NII and if it is a one-off project for Q3 and Q4?
A: The increase in NII includes a EUR20 million incremental from refixing part of the swap portfolio in March. The rest of the increase is due to higher short-term rates and a mix of fixed and variable rate components. We estimate an additional EUR100 million in NII for the full year.
Q: Can you provide guidance on the CSM release for the year?
A: We expect the CSM release to be between 8% and 9% for the full year. We anticipate normalized CSM growth around 5%, with a 3% increase due to new actions.
Q: Why do your payment revenues and volume dynamics seem stronger than the market?
A: Our performance is driven by non-discretionary spending and increased usage of Postepay Evolution cards, which have an IBAN and are replacing current accounts. This has led to higher transaction volumes and average transaction values.
Q: Do you expect strong net inflows in asset management for the second half of 2024?
A: We expect a more balanced contribution from different segments in the second half, with greater emphasis on insurance. Asset management inflows may be more modest compared to the first half.
Q: Can you explain the sensitivity of the coverage units in the life business to interest rates?
A: The increase in coverage units is due to higher interest rates and spreads. Future trends will depend on the movement of these market parameters.
Q: Will the EUR1,000 lump sum paid in September be a one-off?
A: Yes, the EUR1,000 lump sum is a one-off payment covering 2024 and part of 2025.
Q: What is the impact of the anti-trust decision on your energy business?
A: The anti-trust decision has softened obligations, and we do not anticipate any material impact on our energy business activities.
Q: Are you expecting any price action in the mail business in the second half of 2024?
A: No specific universal service repricing is expected in 2024. Ongoing repricing on the non-universal service side will continue at the current pace.
Q: Can you elaborate on the improvement in the combined ratio for the protection business?
A: The combined ratio improved to 83% from 88% due to the consolidation of net insurance and other factors. We confirm a target of 85% for the full year.
Q: When do you expect NII to start declining?
A: We expect NII to stabilize in the third quarter and potentially decline in the fourth quarter, depending on ECB rate cuts. We are confident in achieving at least EUR2.4 billion in total portfolio return for 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
