28 July 2021 Structured Finance Semi-annual Italian NPL performance report: sector will under-perform into the medium term Semi-annual Italian NPL performance report: sector will under-perform into the medium term Italian NPL collection volumes look to be stabilising at 25% below average pre-pandemic levels. Performance has deteriorated slightly Analysts since Scope’s last report: 60% of transactions were performing below servicers’ original expectations in the second quarter of 2021, Rossella Ghidoni against 56% previously (based on Q3 2020 data1). The outlook is weak and risks remain to the downside. +39 02 94758 746 Indeed, weakness in the underlying market is reflected by the NPL Performance Index. The NPI, which tracks cumulative collections against
[email protected] servicers’ original projections, stands at 94 and Scope expects it to remain below the baseline of 100 into the medium term. Meanwhile, notes are Paula Lichtensztein expected to amortise in six to eight years, based on the Scope NPL Dynamic Coverage Index (SCI), which tracks the speed of note amortisation. +49 30 27891 224
[email protected] The share of positions closed by servicers remains low and on those positions that have closed, median profitability has been 87%, below Scope expectations at closing. Vittorio Maniscalco +39 02 94758 456 Scope believes the Italian NPL sector will continue to under-perform into the medium term as the consequences of the pandemic have not yet worked
[email protected] themselves through the economy. By the fourth quarter of 2021, Scope estimates that the share of transactions with collection volumes lagging Antonio Casado servicers’ forecasts will align with second quarter 2021 figures.