The German Parliament does not lose sight of the Italian banks and even the International Monetary Fund, while acknowledging the progress in the disposal of non-performing loans, has not been kind to our credit institutions. But even if the golden age is far away and even if the stagnation of the economy and low interest rates continue to hold back their profitability, not all banks are the same and among them the Credem group of Reggio Emilia is certainly among the most solid . "In 2018 we achieved the highest profit in the last 10 years but we want to continue to grow both in terms of funding and loans": the speaker is Nazzareno Gregori, the Director General of Credem, to whom the ECB has assigned the lowest level of minimum capital requirement to be respected as evidence of its solidity. Credem, which increasingly combines the traditional banking activity with that of wealth management (asset management, private banking, insurance) wants to grow mainly internally but in the face of market opportunities consistent with its business model it would not close its eyes. And in the meantime, he has put a former Ferrari driver from the Formula 1 team in charge of innovation. However, Credem has preserved the habits of the banks of yesteryear who prefer to communicate with deeds rather than with words and when he speaks – as Director Gregori does in this interview with FIRSTonline – he deserves double attention.
Director, Credem closed the 2018 financial year with flattering results, but will the swing between stagnation and recession looming over the Italian economy make it possible to replicate the bank's last financial statement performance also for 2019?
“In 2018, thanks to the constant commitment and professionalism of all the people who work in the Group, we actually achieved extremely positive results, also considering the certainly not easy context. The Group has achieved the highest profit in the last 10 years which, excluding the contribution to the bailout funds, almost 30 million this year alone, would have been even higher. We were able to acquire over 100 new customers, increase loans at an almost double rate compared to the system, consolidate funding with an excellent performance in particular of the insurance component. All this while maintaining the quality of the assets and the solidity among the highest in the system. In this context, I am particularly pleased to recall that we are the Italian bank to which the ECB has assigned the lowest level of minimum capital requirement to be respected, precisely demonstrating how solid the supervisory authority itself considers us. Having said that, coming to your question, it is certainly true that the prospects for our country's economy are unfortunately not particularly rosy even for this year. However, I am convinced that the situation in which our institute finds itself, i.e. having assets of particular quality and a high capital solidity, will allow us to face all the challenges that await us in the best possible way. But not only. We want to continue growing and in this sense we have important objectives both in terms of funding and loans. We expect loans to continue to grow at rates substantially similar to those of 2018, even if the latest signals on GDP certainly point to a particularly uncertain context. More than the absolute objective of growth in volumes, however, we will have to be good at increasing penetration of small businesses and loans to households, where, with a business model like ours, capable of correctly assessing risk, we are able able to generate higher margins. Also with regard to collection, we aim to grow decisively. Clearly the uncertainty of the markets favored an increase in direct deposits in 2018 but, should 2019 consolidate the trends of recent months, we are confident that we will be able to recover much of the market effect lost in 2018, as well as to see a greater propensity to investment by customers.
Like other banks – first of all Intesa Sanpaolo – Credem too is oriented towards integrating its traditional banking activity with the development of wealth management: what are your objectives in this field?
“We want to evolve our service model with the aim of becoming the point of reference for families and businesses in the management and global protection of their assets. In particular, strong focus will be placed on the development of bank insurance thanks to a complete offer and an integrated consultancy model to identify protection needs together with our customers. In this context, we are aiming for sustained growth in premiums with a strong focus on the stand-alone non-life policies sector, in particular home, health and income protection. As far as wealth management is concerned, a sector we have always focused on with great determination, we have very important projects both in terms of product factories and distribution networks. At the product factory level, we want to integrate the so-called ESG criteria into the investment process, launch thematic and specialized funds in the private market, develop the independent financial advisory service for mainly institutional clients and strengthen insurance and protection services. On the other hand, in terms of wealth management networks, we will continue with strengthening and growth and in this sense we have recently created a structure dedicated precisely to the search and selection of the best professionals on the market. Competition in this sector remains particularly high but, as far as we are concerned, we want to continue growing as and more than in the past and we are continuing to hire professionals, both in Credem and in Banca Euromobiliare. I also want to remind you that the hiring of bank employees will naturally continue, in 2019 we aim to hire 150-200 people, 75% of whom are young".
In private banking, Credem is present on the market in different ways through Banca Euromobiliare and the private banking division of Credem itself: there is no risk of overlapping and how does the work of your two entities operating in private banking differ?
“In reality there is and there has never been an overlap, Banca Euromobiliare and Credem's wealth management networks are aimed at different customer targets. Banca Euromobiliare is present in some selected areas and is aimed at customers more focused on broad spectrum asset management, while Credem's networks are present throughout Italy and target customers looking for strong integration with all banking services ”.
How is the joint venture in the insurance field between Credem and Reale Mutua going and what objectives do you propose?
“We are extremely satisfied with the partnership with Reale Mutua. The collaboration continued with the renewal of the shareholders' agreements at the end of June 2018 and the strong orientation towards innovation of the offer in the field of insurance services also in the health sector through Blue Assistance, a company of the Reale Mutua group. Two new products for health and home protection, with earthquake coverage, were also launched in recent weeks. The latter have registered strong interest, confirming that the need on the part of customers on these issues is emerging in an ever more decisive way. Let me say that the insurance bank will be one of the pillars of our growth strategy for the future, and this is not a "fashion" issue but a strategic choice that has been consolidated for years, having also been identified as one of the few Financial Conglomerates in Italy , i.e. banking groups with a strong insurance component. The goal is to further develop our service model to become the point of reference for companies and individuals in the management and global protection of their assets. By the end of 2019, we want to reach over 500 policies overall taken out by households and businesses with, in particular, sustained growth in premiums with a strong focus on the stand-alone non-life policies sector, for which growth of more than 10% is forecast, in particular home, health and income protection”.
At the end of 2018 Credem made an 80 million euro NPL sale and now your NPLs are at 4,4%, i.e. less than half of the national average: will you stop here or are you planning other NPL sales?
“We have always had a very low level of non-performing loans and even the disposals we have recently made were dictated by market opportunities rather than the need to reduce the level of non-performing loans. Suffice it to recall that at the end of September, before the operation you mentioned, we had an NPL ratio of 5,1% compared to the average 9,7% of Italian banks at that time. Precisely for this reason we have no need to make new operations, we have a very limited stock of non-performing loans and we are perfectly capable of managing them internally, however we will naturally evaluate if a convenient market opportunity arises”.
Curiosity was raised by the recent hiring in Credem of a character unrelated to the banking business such as Piergiorgio Grossi, the new chief innovation officer, with experience in Ducati and in Ferrari's Formula 1: why did you hire him? What is his mission? Is this the first move to face the Fintech challenge?
“I have always been firmly convinced that innovation represents one of the key elements for competing on the market, not only for a bank but for any reality. We often tend to automatically associate innovation with technology, almost to confuse the two concepts. Innovation is a broader concept of technology, yes it is technology but not only that, it is also and above all a different approach to work and to the organization of the company, which knows how to understand and adapt to the world around us. In reality we do not feel a particular "strategic" pressure from the new technological realities. Technology exists in the bank and it is one of the areas in which we have always invested massively, but it is increasingly important to open up to the outside world to have a better view of the trends and solutions that are developing on the market. It will also be important to be ready to understand where the market is going and what direction our business needs to take, not only for the next 4 or 5 years but also with a horizon of 15/20 years. Beyond fashions and contingent trends, precisely because we are a complex and structured organization we must make thoughtful and farsighted strategic choices and this can only be done if the company's approach and mentality is flexible, agile and ready to implement customer needs".
In Credem's strategy will there be only internal growth or, under certain conditions, is a consolidation operation through acquisition/merger with medium-small banks conceivable?
“Our position is clear and I want to reiterate it strongly: we have a strategy based on internal growth. We will also evaluate external growth opportunities consistent with our business model and able to generate an advantage for shareholders".
In addition to Emilia, Credem is present in Lombardy and also in the south in Sicily and Campania: what is the territorial horizon of Credem's strategy? Strengthen where you are already present or extend to other areas of the country?
"We are present throughout Italy and do not have specific areas of development, we aim to grow in all areas, acquiring new customers, significantly strengthening all the Group's networks and hiring new personnel".
Credem has its heart and roots in Emilia which is to some extent the cradle of the medium-sized enterprises of the Fourth Capitalism: the clouds that hang over our economy will put Emilia's medium-sized enterprises to the test or, conversely, their international projection will allow offset the slowdown in activity at home?
“Small and medium enterprises are the backbone of our economic system and are perhaps the category that has suffered the most in recent years. As far as we are concerned, we have always believed in the importance of supporting SMEs that want to invest and grow, as is evident, among other things, from the growth in total loans to all customers, both businesses and individuals, of 3,1% in 2018 , compared to the +1,6% of the system in the same period, and as much as 45,4% in the last 10 years with an increase of 8 billion euros in absolute value. I'm not saying anything new if I say that the keys to successful growth are linked to investments in innovation and internationalization. Exports, on the other hand, are part of the DNA of our country and of Emilia Romagna and have allowed us to emerge from the economic crisis of recent years. In summary, the entrepreneurs we meet, both at the level of small and medium-sized enterprises, and in more structured realities, know very well what to do and many have never stopped investing and innovating: it's us, as banks, and first of all I speak as Credem , which we must then continue to evolve, a bit like we did in recent years when we brought the benefits of agreements signed with important institutional partners to smaller companies, or as we are doing by strengthening export services”.
What do you think of the sentence of the EU Court which condemned the European Commission on the bank bailouts and fully agreed with Italy on the use of the Interbank Deposit Guarantee Fund and what perspectives can this sensational pronouncement open up?
“Without going into the merits of the specific question, I believe it is a useful example to understand how much a clear and outlined regulatory framework is essential to allow a regular and healthy performance of all the economic activities of a country. The rules are the foundations on which a modern and advanced economic and social fabric is built. Certainly European supervision is going in this direction: to create a "framework" common to all of Europe for banking activity; however, it is important to continue working hard to clarify all aspects because only in this way will true integration be achieved”.
