Release Date: May 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Banco BPM SpA (BNCZF, Financial) reported its best quarterly net profit in history at EUR 511 million, showcasing strong financial performance.
- The company is ahead of its planned trajectory, with noninterest revenues pro forma, including Anima, representing 49% of total revenues, close to the 2027 target of 50%.
- Customer loans increased by 2.5% quarter-on-quarter, and investment products grew by 15% year-on-year, indicating strong commercial performance.
- Operating costs decreased by 3.5%, and the cost-income ratio improved from 47% to 44%, reflecting effective cost management.
- The Anima acquisition is expected to contribute significantly, with an EPS accretion of more than 10% and a return on investment of 13%.
Negative Points
- Despite strong results, the net interest income (NII) decreased by 5.5% year-on-year, impacted by lower Euribor rates.
- The company's CET1 ratio is projected to be around 12.9% after the Anima acquisition, which is slightly below the 13% target.
- There is a reliance on DTAs and fair value reserves for organic capital generation, which may not be sustainable long-term.
- The market remains concerned about the company's ability to maintain its CET1 ratio above 13% post-Anima acquisition.
- The company faces potential challenges in maintaining its current level of loan growth, particularly in the household loans segment.
Q & A Highlights
Q: Can you discuss the strong loan growth this quarter and how it relates to market share and pricing discipline?
A: (Giuseppe Castagna, CEO) The strong loan growth is partly due to a reduction in interest rates, which has boosted demand for credit. We achieved EUR8 billion in new loans in Q1, surpassing our expectations for 2025. We maintain price discipline by focusing on client quality and guarantee schemes, especially for SMEs.
Q: Could you clarify the organic capital generation and its sustainability, given the strong net profit and low default rates?
A: (Edoardo Ginevra, CFO) Organic capital generation was 15 basis points this quarter, despite an 80% payout ratio. We expect continued capital generation from DTAs and fair value reserves, with 175 basis points to be transformed into capital by 2027.
Q: Does the net profit guidance include the capital gain from Anima, and what are the expectations for common equity benefits from reallocating Anima intangibles?
A: (Edoardo Ginevra, CFO) The guidance includes the Anima capital gain. We are studying the reallocation of Anima intangibles, which could improve our capital position. We apply a 100% risk weight for insurance business, not 150%.
Q: How do you view the potential for M&A, especially in light of the UniCredit situation?
A: (Giuseppe Castagna, CEO) We are focused on our stand-alone strategy but consider ourselves a key player in potential Italian consolidation. Our unique position with a strong product factory makes us open to exploring opportunities.
Q: Can you elaborate on the strong performance in investment product placements and its sustainability?
A: (Giuseppe Castagna, CEO) The strong performance is due to our comprehensive product factory, allowing us to offer the best products for clients and the bank. While volume growth may not continue at the same pace, the yield on sales is expected to remain high.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
