The rating is based on the low-risk business model of IBL, a leader in the Italian market for payroll and pension deducted loans (PDLs), 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 across the credit cycle.

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

IBL’s capital position is adequate, despite the high regulatory risk-weighting of PDLs. Scope also highlights the key person risk regarding Mario Giordano, the bank’s CEO since 1998.
 

To download the rating report, click HERE.