modefinance Corporate Credit Rating (Unsolicited) for FINECOBANK BANCA FINECO S.P.A.: A2- (Affirm)
Key Rating Assumptions
The reason for the review is the following:
- In May 2019, FinecoBank and its main shareholder Unicredit S.p.A. laid the foundations for FinecoBank’s full independence. This important event can represent for the bank an important opportunity to confirm its importance in Italian banking system and it doesn’t cause problems in profitability and capital adequacy ratios. At the same time, there are potential problems in terms of funding and market’s vulnerability.
modefinance’s rating is based on the following key elements:
- The overall financial and economic situation of FinecoBank S.p.A. is good and constant above all the considered period.
- The entity’s assets portfolio is mainly composed by loans and advances to banks, net loans and advances to customers represent only 12% of total earning assets, this is a good point in this economic period: first of all because of the low level of interest rates; secondly the lending market is facing several issued with the non performing loans; and finally, the dynamics described above made other types of interest earning assets more attractive. Taking into account 2018 annual financial figures, FinecoBank’s position confirms how it is one of the most profitable banks in Italy.
- The weight of net commissions on the operating revenues (48,19%) registered a relevant amount compared to net interest income on operating revenues (47,7%), that highlights the bank ability of diversifying its assets’ portfolio.
- The CEO is a prominent key figure in the bank management, and it is considered, one of the best banking CEO for Small & Mid-Cap companies in Europe.
- FinecoBank overperformed the peer group in all the considered areas: the rated entity recorded very good values in terms of size, profitability and asset quality.
- It has been introduced the new reform on IFRS 9 (financial instruments), with a new classification for financial assets and liabilities. This could impact on evaluation for the financial items and could be a potential downgrade in the sovereign bonds of ex-PIIGS.
- The future effects of the political risk, mainly arose by the uncertain results of the upcoming European parliament’s elections, and the macroeconomic conditions, due to the low resilience of Italian economy, could have a negative impact on the bank.
The present Corporate Credit rating is issued by modefinance under EU Regulation 1060/2009 and following amendments.
The present rating is unsolicited: the rated entity and/or related third parties have not participated in the rating process and modefinance has no access to accounts or other relevant internal documents of the rated entity and/or related third parties. Solicited and unsolicited ratings issued by modefinance are of comparable quality, as the solicitation status has no effect on methodologies used. More comprehensive information on modefinance Corporate Credit Ratings are available at this link.
The present Corporate Credit Rating is issued on MORE Score Methodology for banks 1.0 and Rating Methodology 1.0. A comprehensive description of both methodologies, as well as information on modefinance Rating Scale and Mappings, is available at this link.
The quality of the information available on the rated entity and used to determine the present rating was judged by modefinance as satisfactory. Please note that modefinance, however, is not in a position to guarantee the accuracy of that information. As such, modefinance can accept no liability whatsoever for actions taken based on any information that may subsequently prove to be incorrect. The present credit rating was notified to the rated entity in order to identify potential factual errors, as prescribed by the CRA Regulation.
The Rated Entity or Related Third Party has not purchased ancillary services from modefinance. The rating action issued by modefinance was performed independently. The analysts, members of the rating team involved in the process, modefinance Srl and its members and shareholders do not have any conflicts of interest in relation to the Rated Entity and/or Related Third Parties. If in the future a potential conflict of interest is identified in relation to the persons reported above, modefinance Ratings will provide the appropriate information and if necessary the rating will be withdrawn.
The present Credit Rating is an opinion of the general creditworthiness that modefinance issues on the rated entity, and should be relied upon to a limited degree. The issued rating is subject to an ongoing monitoring until withdrawal.