How is Banco Bpm doing
What emerges from the Banco Bpm quarterly report and the BPM Vita dossier., The article by Emanuela Rossi
Excellent numbers for Banco Bpm in the first three months of 2022. The group led by Giuseppe Castagna posted a net profit of 178 million euros, up by 77.6% on an annual basis and higher than analysts' expectations. Net of non-recurring items, the profit rises to 199 million. “Record levels”, as stated in the note accompanying the quarterly report, for profitability which reached the “best pre-tax profit ever recorded”, equal to 399 million euros. The rest of the year should also continue with excellent results while the bank continues to make its assessments – given the attention received – on the advisability of an alliance in the bancassurance sector .
REVENUES, LOANS, QUALITY OF ASSETS, BALANCE SHEET
Looking at the results better, it turns out that in the first quarter of 2022, revenues amounted to 1,186 million euros, + 9.1% compared to the last quarter of 2021 and + 5.2% on the year. Plus sign also for the result of the operations to 561 million (+ 16%), also thanks to the dynamics of the costs, with the cost-income fall in a year from 57.1 to 52.7%. The cost of risk, the note from the group still warns, stood at 54 basis points, the lowest level ever recorded which brought pre-tax profit to 399 million (+ 54%).
On the commercial front, performing net "core" loans to customers increased by 2.1% to 101.3 billion on a trend basis – with new disbursements of 6.7 billion (+ 14.9% on the fourth quarter of 2021) -, core direct deposits of 5% at € 106.9 billion and managed deposits of 3.2% at € 63.3 billion.
As regards the quality of balance sheet assets, the portfolio of non-performing loans continues to be reduced, which should lead to an overall cut of over 1 billion by the presentation of the results for the first half of the year. Banco Bpm reminds us that at the end of April the sale of a portfolio of unlikely to pay and bad loans with a gross book value of approximately 700 million (Argo project) was approved. Following this deconsolidation, therefore, non-perfoming credits will reach 5.6 billion, compared to 8.7 billion as of March 31, 2021, causing a reduction in the gross NPE ratio from 7.5% to 4.9% (3, 8% according to the Eba methodology).
The equity position is "solid" although the fully phased Cet 1 ratio falls to 13.1% from 13.4% at the end of 2021 due to the "decrease in own funds resulting from the reduction in the valuation reserves of securities measured at fair value" .
THE FORECASTS FOR 2022
If the first quarter went well, the same is expected for the whole of 2022. "Barring further worsening of the scenario", in fact, an "improvement" in net profit is expected in Piazza Meda compared to 2021, "in line with the trend outlined in the Strategic Plan and with the related medium-term targets. The institute cannot fail to underline that “the operating performance of the group during the year will inevitably continue to be influenced by the external context” which is leading to a slowdown in Italy's growth prospects.
Therefore, some problems are expected in the second quarter for the interest margin, due to the lower contribution deriving from the end of the subsidized loans of the ECB, which, however, could take advantage of the rise in interest rates. "Commissions – reads the note -, despite being affected by the overall slowdown in economic growth and market tensions, will still be supported by the dynamics of the asset management and bancassurance sectors, while the strong governance of operating costs will continue to constitute one of the main areas of focus of managerial action ".
In terms of credit losses, the "process of reducing the cost of credit initiated in recent years should continue, without prejudice to the derisking trend and the maintenance of a solid level of coverage".
THE SATISFACTION OF AD CASTAGNA
The CEO Castagna was satisfied who, during the conference call with the analysts – reports Ansa – noted that the institute had presented "a set of very solid and strong results, with a profitability at record levels" combined "with a solid position of capital and an asset quality that is still improving ".
In addition, the manager underlined, the quarterly report “puts us in a position to achieve the targets of the strategic plan, with respect to which we are well established”.
THE FUTURE OF BANCASSURANCE
In the presentation slides of the quarterly, the point was also made on the bancassurance issue. We recall that Banco Bpm recently announced the exercise of the option to purchase the 81% stake in Bipiemme Vita, the bancassurance joint venture signed with Covéa, owned by the French group for an estimated cost of 310 million euros. Moreover, other important operators, such as Crédit Agricole, Axa, Generali, Allianz, are looking with interest in the insurance business of Piazza Meda.
"We believe that the internalization of bancassurance represents a good point" and "having collected the interest of strong insurance companies" the institute intends to verify if there are "financial, strategic or operational aspects that can beat the internalization of the business plan" . No obligation to an alliance, however: "It is an option and it is good for us to explore all options".
Banco Bpm highlighted that it had received "multiple expressions of interest" from companies for a partnership in bancassurance and for this reason it launched a "structured evaluation process" so as to "evaluate alternative scenarios" with respect to the industrial plan. Precisely from the internationalization of bancassurance in the plan, a net profit of 125 million euros is expected in 2024. The different proposals, underline by the institute, will be measured according to "three perspectives", namely "financial (creation of value for shareholders), strategic (solidity of the group's overall business model) and operational impact ".
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-trimestrale-2022/ on Fri, 06 May 2022 05:21:01 +0000.