Scope Ratings has published its rating report on IBL Banca, rated BBB with Stable Outlook.

The rating is based on the low-risk business model of IBL, a leader in the Italian market for payroll and pension deducted loans (PDL), which is a high-margin, low-risk personal loan product with a long history in Italy. These loans have a complex structure, which involve several players and a long origination process. IBL seems to have mastered the vertical value chain entirely, evidenced by the bank’s negligible credit-loss levels and high profitability.

The ratings also take account of the large exposure to Italian government bonds, mostly financed via short-term repos. This represents a large risk concentration, despite our currently positive credit view of the Italian sovereign. Aside from repo funding for the government bond portfolio, IBL funds itself through deposits and securitisations of its loan book, which recently have mostly been retained and used as collateral for ECB term repo operations.

IBL’s capital position is adequate, despite the high regulatory risk-weighting of PDL loans. We also highlight the key man risk regarding Mr. Mario Giordano, the bank’s CEO since 1998.

Download updated report on IBL.