Banco Bpm, here’s how Castagna will make Credit Agricole and its partners fat
What emerges from Banco Bpm's new strategic plan presented by company head Giuseppe Castagna on dividends and more. Facts, numbers and scenarios
New strategic plan for Banco Bpm which aims for a profit of around 6 billion between 2023 and 2026. Good news for shareholders who should receive 4 billion, or – as the credit institution itself points out – a distribution equal to five times that of the last four years and higher than 50% of the current one. In detail, next year the shareholders will receive approximately 1.3 billion euros while for the following years the remuneration methods between coupons and buybacks will be gradually defined. Excellent end of the year, therefore, for the shareholders of Banco Bpm, among which the French group Crédit Agricole (9.18%), Capital Research and Management Company (4.99%), the Norwegian central bank Norges Bank (3.05%) stand out ) and the Enasarco Foundation (3.01%).
THE NUMBERS OF BANCO BPM'S STRATEGIC PLAN
The note released by the bank highlights that the 2023-2026 strategic plan (called "A solid success story") is based "on seven pillars to support customers and the territory, with greater returns for all stakeholders and full integration of strategic sustainability ambitions and ESG initiatives and targets ”.
Looking at the objectives, we note that by 2026 revenues should rise to around 5.4 billion (from the 5.25 billion expected in 2023), net profit over 1.5 billion (from 1.2 billion expected this year) and the operating result at approximately 2.75 billion. The cost-income ratio would fall below 50% and the Cet1 ratio would be around 14%. And again: net loans to customers would reach around 102 billion, current accounts and deposits around 100 billion, indirect funding over 120 billion.
On the non-performing loans front, the aim is for gross loans to be around 3% of the portfolio, with a cost of risk of 45 basis points. Finally, interest margin is expected to decline, from 3.25 billion to 3.05 billion, and operating costs to rise, from 2.6 billion in 2023 to 2.7 billion in 2026.
NEWS ON THE EMPLOYMENT FRONT
Also announced in the plan is "the continuation of the path to rationalize the distribution network" which involves the closure "of over 400 cash desks" and "the reduction of the number of branches to approximately 1,250 in 2026" compared to the current 1,350. Important reduction on the employee front: compared to the 1,600 expected exits, also through an incentive plan that would be activated in 2024, only 800 "high potential" young people would be hired.
Furthermore, with the 2023-2026 Plan, the aim is to accelerate the innovation process thanks to 600 million in IT investments, over 20% more than in the previous three years. With these resources, we read in the note, we intend to create "high added value initiatives aimed at guaranteeing full digitalisation of the offer to our customers, an improvement in the quality of service and high operational efficiency by internally promoting a culture of cost excellence”.
CASTAGNA: STAND ALONE PLAN, WE REWARD SHAREHOLDERS
In the press release issued by the bank, Giuseppe Castagna, CEO of Banco Bpm, highlights how the new strategic plan is "built in a stand alone logic" and "intends to clearly define strategies, actions and tools that aim at sustainable income growth, accompanied by the creation of value for all stakeholders and by a significant increase in remuneration policies capable of rewarding shareholders".
According to Castagna "from next year, we will begin to benefit from the results of our product factories, in particular those just finalized, so as to act positively on the leverage of revenues and commissions, in an economic context which presumably, starting from 2024, could see a reduction in interest rates." The group certainly aims to work "to be a leading bank, increasingly competitive, in offering digital and omnichannel services for the different customer segments, strengthening our proposal of solutions in favor of all customers, with particular attention to Italian SMEs and mid caps, the true backbone of our production system, for which we intend to increasingly establish ourselves as a reference bank".
CASTAGNA: WE AIM TO IMPROVE PERFORMANCE ON THE STOCK MARKET
During the conference call with analysts, as reported by Radiocor, Castagna recalled that Banco Bpm shares recorded the best performance in the sector in Europe following the merger between Bpm and Banco Popolare, but assured that "there is a lot of space to further improve performance."
No word from the CEO, however, on the subject of future moves in the M&A field: in recent months there had been rumors of interest from Unicredit and Credit Agricole, already the bank's largest shareholder. Furthermore, it is no mystery that Palazzo Chigi aims to create a third strong national group – after Intesa Sanpaolo and Unicredit – by marrying Montepaschi (whose privatization has begun, with the Treasury having recently fallen from over 64% of shareholding at 39.23%) with Banco Bpm or secondly with Bper. At the moment everyone is ruling out a trip to Siena but who knows – also thanks to the recovery plan launched by CEO Luigi Lovaglio – the future may hold wedding surprises.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/banco-bpm-nuovo-piano-strategico/ on Tue, 12 Dec 2023 11:25:38 +0000.